Oil Mixed As Analysts Weigh Impact of Geopolitical Hostilities

by Ship & Bunker News Team
Tuesday March 26, 2024

Oil prices on Tuesday fluctuated as a result of analysts weighing the impact of everything from the Organization of Petroleum Exporting Countries' (OPEC) extended output cuts to hostilities in the Middle East and Russia.

Brent was unchanged at $86.75 per barrel at 13:10 GMT, while West Texas Intermediate rose 13 cents to $82.08.

Oil was said to be supported by the aftermath of Moscow ordering companies to cut output in the second quarter to meet a 9 million barrels per day (bpd) target in compliance with pledges made to OPEC.

Citing the Russia-Ukraine war whose latest development consisted of Ukraine drone attacks on Russian refineries, Yeap Jun Rong, a market strategist at IG Asia in Singapore, said, "The risks of supply disruptions persist" as more refineries are damaged.

Goldman Sachs analysts estimated that the drones have knocked out about 900,000 bpd of capacity, in some cases permanently: "The impact of refining disruptions on crude prices is mixed, with a bearish effect from the decline in refinery demand and a bullish effect from the potential reduction in Russia oil exports."

Meanwhile, Bloomberg noted that the technical backdrop for oil is positive, "With Brent's moving averages close to forming a golden cross, a bullish pattern…its last formation for the generic contract in August preceded Brent surging by more than $10 a barrel to above $95."

In other oil news on Tuesday, Al Ghais, OPEC's secretary general, told Emirati news agency WAM that the oil industry will need to invest $11.1 trillion in exploration and production by 2045 to accommodate growing energy demand and ensure stable supply.

He said, "Allocating more investments in the oil industry will contribute to promoting the sustainability of the global energy sector, securing sufficient and reliable supplies for the world as a whole, and ensuring secure supplies for future generations."

Ghais earlier remarked that "If oil disappeared tomorrow, millions of jobs would be lost, tax revenues would be depleted, industrial production would crimp, economic growth would go into reverse, [and] the plight of the fuel poor would be worsened."