Crude oil prices to trade with upside bias over geopolitical tensions; Brent may hit $90-$95/bbl in near-term
Also Read: Oil market oversupplied with record-high US output, Brent seen at $87-$92 for 2024: ShareKhan's Mohammed Imran Tighter Markets: Physical markets tightened following a seasonal pattern in February. However, the more significant driver for the uptick in prices was the decision by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) to extend production cuts from March 2024 to June 2024.
OPEC+ Decision: The decision came with an implicit guidance that could get extended over the remainder of the year. The decision by the oil cartel implied that physical markets were expected to remain tight from constrained supply over the second quarter in 2024.
Ukraine drone attack: The rise in geopolitical tensions also contributed to driving the prices higher in the last few days, with Ukraine launching drone attacks on Russian oil refineries, many of them deep within Russia. This resulted in three key oil refineries Lukoil Nizhny (0.3 mbpd), Rosneft Ryazan (0.3 mbpd) and Surgut Kirishi (0.4 mbpd) going partially offline.
Ukraine officials have stated the intent is to damage a key industry that provides revenue for Russia’s war and to disrupt domestic fuel supplies. Red Sea crisis: Houthi militants in Yemen continue to target shipping vessels in the Red Sea, despite airstrikes from the US that has resulted in an increase in concerns over more disruptions to supplies from the region.
However, so far, the hit to actual supply from developments in the Middle-East has not taken place that is in turn limiting the degree of upside in Brent crude oil prices. Also Read: India's crude oil output rises 7.9% to 2.3 MMT in February, imports decline 6.6% YoY: PPAC Apart from the near-term price outlook, ICICI Bank has
. Read more on livemint.com
