Ejiofor Alike with agency reports
United States’ sanctions against Iran and Venezuela, fighting in Libya and production cuts led by the Organisation of Petroleum Exporting Countries (OPEC) yesterday pushed crude oil price to a five-month high of $70 per barrel, as expectations of tighter global supply persist.
While the international benchmark Brent futures gained 56 cents, or 0.8 per cent, to $70.90 per barrel, United States West Texas Intermediate (WTI) crude futures were up $1.09, or 1.7 per cent, to $64.17 a barrel.
Brent and WTI hit their highest since November 2018 at $70.99 and $64.39 a barrel, respectively.
Reuters reported that oil prices extended gains after crude stockpiles at Cushing, Oklahoma, the delivery point for WTI, fell by about 419,000 barrels last week, according to traders.
Fighting in oil-rich Libya has also threatened to disrupt crude oil exports as eastern forces were advancing on the country’s capital, disregarding global appeals for a truce.
To prop up prices, the Organisation of Petroleum Exporting Countries (OPEC) and allies such as Russia pledged to withhold around 1.2 million barrels per day (bpd) of supply from the start of this year. The group, led by Saudi Arabia, has exceeded those expectations so far this year.
Despite the factors boosting prices, there are still factors that could bring oil prices down later this year.
Russia is said to be a reluctant participant in its agreement with OPEC, and Kirill Dmitriev, the head of Russia’s direct investment fund, reportedly said OPEC and its allies should raise output from June. Dmitriev previously said it was too early to pull back from cuts.
Saudi Energy Minister, Khalid al-Falih said yesterday it was premature to say whether a consensus existed among OPEC and its allies to extend cuts but a meeting next month would be key.
Russian oil output reached a national record high of 11.16 million bpd last year.
US crude production reached a global record of 12.2 million bpd in late March.