Oil Prices Surge as Storm Disrupts Kazakh, Russian Exports
Unforeseen Supply Disruption
Oil prices surged on Wednesday following a severe storm in the Black Sea region that disrupted oil exports from Kazakhstan and Russia. The unexpected disruption has raised concerns about potential supply shortages, while investors eagerly anticipate a crucial decision by OPEC+ regarding output cuts. This sudden turn of events has sent shockwaves through the oil market, impacting prices and investor sentiment.
Price Movement
Oil futures saw a significant increase, with Brent crude gaining 33 cents, or 0.4%, reaching $82.01 a barrel, and U.S. West Texas Intermediate (WTI) climbing 45 cents, or 0.6%, to $76.86 a barrel. The surge in prices comes after both benchmarks gained about 2% on Tuesday, fueled by speculation surrounding OPEC+ potentially extending or deepening supply cuts.
Disrupted Exports
A severe storm in the Black Sea region disrupted up to 2 million barrels per day (bpd) of oil exports from Kazakhstan and Russia, according to state officials and port agent data. This unforeseen event has forced Kazakhstan’s largest oilfields to cut their combined daily oil output by 56% from Nov. 27, as reported by the Kazakh energy ministry.
Market Sentiment
“Investors covered short positions ahead of the OPEC+ meeting amid worries over supply disruption from Kazakhstan,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities. The market is closely monitoring the OPEC+ policy and demand outlook, with WTI expected to hover around $76 for the foreseeable future, barring any significant changes in OPEC+ production cuts.
OPEC+ Ministerial Meeting
OPEC+ is scheduled to hold an online ministerial meeting on Thursday to discuss 2024 production targets, after delaying the meeting from Nov. 26. The talks are expected to be challenging, with the possibility of a rollover of the previous agreement rather than deeper production cuts, according to four OPEC+ sources.
Market Support
Oil prices also found support from the weakness of the U.S. dollar and a drop in inventories. The dollar’s weakness has made oil cheaper for those holding other currencies, while U.S. crude oil inventories fell by 817,000 barrels last week, according to market sources citing American Petroleum Institute figures. Weekly U.S. government data on stockpiles is due on Wednesday.
