Oil Continues To Soar On Supply Concerns, While Gaza Ceasefire Fails To Sway Traders

Meanwhile, India scrambles to settle its oil debts with Russia: File Image/Pixabay

Oil prices on Wednesday continued their winning ways, this time with two key benchmarks hitting  their highest settlements since July 2024, on the continued strength of U.S. sanctions against Russia stoking supply concerns.

Brent settled up $2.11, or 2.64 percent, at $82.03 per barrel, the highest since August 2024; West Texas Intermediate settled up $2.54, or 3.28 percent, at $80.04 per barrel, the highest since July.

Oil also received significant if fleeting support from the Energy Information Administration, which reported that U.S. crude fell last week to its lowest level since 2022.

However, capping gains was the disclosure that gasoline and distillates rose more than expected; also, late news of a Gaza ceasefire deflated long-standing Middle East supply concerns.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) issued its forecast for global demand growth, and with regards to this year and next the cartel held to the same growth rate: 1.4 million barrels per day (bpd), which is in line with OPEC's earlier prediction that demand will hold steady for at least another two decades (by contrast, the International Energy Agency insists demand will peak this decade due to a global shift from fossil fuels to cleaner energy).

For its part, Saudi Arabia seems to side with the notion of renewables taking prominence sooner than later: Abdulaziz bin Salman, energy minister for the kingdom, told delegates at the annual Future Minerals Forum in Riyadh that "Oil is no longer an energy security challenge – it's going to be gas, electricity, predominantly minerals" – a reference to minerals critical to the energy transition and advanced technologies, including lithium, cobalt, nickel, graphite, manganese and other rare earth elements.

Bin Salmon added, "You'll have AI, data centers, mining, crypto mining ... can you imagine what will happen to energy demand? Can you imagine the race between mining to create energy, and energy to create mining and the growth of these economies?

"I really don't like the idea of being the energy minister at that time."

In related oil news on Wednesday, sources told media that India is halving the time it usually takes to settle payment for Russian oil, from five days to just two, in a race to complete the deals before the seven-week wind-down period in the latest sanctions ends at the end of February.

It is believed that a quarter of the Russian shadow fleet – which helped inspire the latest round of sanctions from Washington - has been nullified.