Oil Prices Remain Strong as OPEC+ Cuts and Russian Refinery Attacks Impact Supply

Positive Outlook for Oil Prices

London (Reuters) – By Noah Browning

Oil prices are holding near five-month highs, supported by expectations of tighter supply following OPEC+ cuts and recent attacks on Russian refineries. Additionally, positive Chinese manufacturing data suggests a strong demand outlook for oil.

Market Movements

Thin Trading Volume and Price Movements

Currently, Brent crude is trading at $86.65 a barrel, down 35 cents, after a 2.4% increase last week. Meanwhile, U.S. West Texas Intermediate crude stands at $82.87 a barrel, a decrease of 30 cents following a 3.2% gain last week. Trading volumes are low due to Easter holidays in various countries.

Supply and Demand Dynamics

OPEC+ Production Cuts and Impact on Crude Supply

OPEC+ has committed to extending production cuts until the end of June, potentially tightening crude supply in the Northern Hemisphere’s summer. Russian Deputy Prime Minister Alexander Novak announced a focus on reducing output to balance production cuts with other OPEC+ members.

Geopolitical Factors

Drone Attacks and Disruption in Russian Refineries

Recent drone attacks on Russian refineries have disrupted operations, leading to a decrease in fuel exports from Russia. This disruption, combined with geopolitical tensions, adds to the bullish sentiment in the market.

Impact on Global Markets

Effects of Russian Refinery Attacks on Global Supply Chains

Almost 1 million barrels per day of Russian crude processing capacity has been affected by the attacks, impacting high-sulphur fuel oil exports to Chinese and Indian refineries. This disruption in the supply chain could have widespread implications for global markets.

Industry Insights

Europe and China’s Manufacturing Sector Resilience

European oil demand exceeded expectations, while China’s manufacturing activity expanded for the first time in six months, indicating a recovery in the world’s largest crude importer’s economy. Despite challenges in the property sector, oil demand remains strong.