Oil shoots up to 2023 highs after Saudi, Russia supply cuts; Brent over $93/bbl
Oil prices leaped to their highest level this year on Thursday, September 14, extending its rally as expectations of tighter supply outweighed worries about weaker economic growth and rising US crude inventories. Crude oil has picked up a robust momentum ever since Saudi Arabia and Russia extended their voluntary output cuts till the end of December, in order to support prices.
Brent crude was up $1.74, or 1.88 per cent, at $93.62. The session high of $93.68 was its highest since November 2022. US West Texas Intermediate crude (WTI) gained $1.57, or 1.8 per cent, to $89.09. It also hit a 10-month high of $90.26, according to news agency Reuters.
Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a September 19 expiry, were last trading higher by 2.23 per cent at ₹7,502 per bbl, having swung between ₹7,364 and ₹7,505 per bbl during the session so far, against a previous close of ₹7,338 per barrel.
The continuing supply cuts could lift Brent futures above the $100 a barrel threshold before the end of the year, according to analysts at Bank of America.
What’s fueling the rally in crude prices?
-Earlier this month, oil producers Saudi Arabia and Russia extended their voluntary oil output cuts of a combined 1.3 million barrels per day (bpd) to the end of the year which resulted in a sharp surge in international crude prices – reaching a 10-month high peak.
-These are on top of the April cuts agreed by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) running to the end of 2024. Ending the week, oil gained almost 1 per cent to a nine-month high on Friday on rising US diesel futures and worries about tighter supplies.
-OPEC stuck to its forecasts for robust growth in global oil demand in 2023 and 2024. The producer group expects the world oil demand will rise by 2.25 million bpd in 2024, compared with a growth of 2.44 million bpd in 2023. Both forecasts were unchanged from last month.
-Meanwhile, the International Energy Agency (IEA) said that extension of supply cuts by OPEC+ to the end of 2023 will lock in a substantial market deficit through the fourth quarter, holding on to its estimates for demand growth this year and next.
MORE TO COME…
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Updated: 14 Sep 2023, 10:26 PM IST
