Oil Prices Surge on Global Supply Concerns
Oil prices saw a significant surge on Tuesday, with the global benchmark contract reaching its highest level this year. The increase was fueled by fresh worries about global supply as signs of demand recovery emerged.
Prices Soar Amid Supply Concerns
The futures market showed a 1.5% increase, with the price per barrel reaching $84.94 for the global benchmark and $88.59 for the Brent contract. This marks the first time Brent has surpassed $88 since October.
Ukrainian Drone Strikes Russian Refinery
A Ukrainian drone targeted Russia’s third-largest oil refinery, hitting a crucial processing unit handling 155,000 barrels of crude daily. Although the damage was minor, any disruption at Tatneft’s Taneco refinery could exacerbate fears of inadequate global supply to meet growing demand.
Geopolitical Tensions Escalate
The strike on the Russian refinery coincides with suspected Israeli airstrikes on Iran’s consulate in Damascus, heightening tensions in the Middle East. The ongoing conflict between Israel and Hamas, coupled with potential Iranian involvement, threatens further disruption to oil supplies from the region.
Market Review on the Horizon
OPEC+ is set to convene an online meeting to assess the market situation in light of recent developments. The alliance, led by Saudi Arabia and Russia, extended production cuts last month to stabilize the market. Further adjustments to output are unlikely before the June meeting.
Steady Demand Growth Expected
Manufacturing data from China and the U.S. indicated the first positive growth in months, hinting at rising oil demand. Similar trends in Europe suggest a potential upswing in consumption, aligning with projections of increased market activity.
API Crude Stockpile Update
The API is scheduled to release data on U.S. crude inventories later, with expectations of a 2 million barrel drawdown. Last week’s figures showed a substantial increase, underscoring the need for continued market monitoring and adjustment.
