Brent oil rose almost 5% on Monday, fueled by fears over crude supplies after US President Joe Biden’s visit to Saudi Arabia, the world’s biggest crude exporter, with little notable progress.
At around 4:15 p.m., a barrel of North Sea Brent, for delivery in September, gained 4.71% to $105.92. A barrel of American West Texas Intermediate (WTI), for August delivery, was up 4.46% at $101.94. Oil prices had fallen significantly in recent days, due to fears of a slowdown in the world economy, accentuated by inflation levels.
No concrete impact “for several weeks”
However, these fears would be exaggerated, according to Tamas Varga, an analyst at PVM Energy, who argues that “supply restrictions will once again become the main driver of the market.” The dollar’s decline on Monday also helped boost crude prices as crude oil became more attractive to investors using other currencies as the price of oil is denominated in dollars.
Meanwhile, US President Joe Biden made his first official tour of the Middle East last week with a controversial visit to Saudi Arabia, hoping for a push from the world’s largest crude oil exporter to reduce high oil prices.
Joe Biden assured that his talks with Saudi officials on Friday were fruitful, but warned that a concrete impact should not be expected “for several weeks.” However, his national security adviser, Jake Sullivan, tempered expectations, telling reporters that any action “will take place within the framework of OPEC+,” the Organization of the Petroleum Exporting Countries, and its allies.
European embargo on Russian oil
With OPEC+’s quota system due to end in September, investors will scrutinize the alliance’s upcoming meetings. Furthermore, according to Susannah Streeter, “uncertainty is growing about the impact of a possible cap on Russian crude prices in the context of the war in Ukraine, as Moscow prepares for its next offensive.”
In late June, the leaders of the G7 countries pledged to develop a “mechanism” to limit the price of Russian oil globally in order to deprive Moscow of some of its windfall energy. UBS analysts also note in a note that the progressive European embargo on Russian black gold will result in “a reduction of almost 3 million barrels per day of crude oil and oil products from Russia by the end of the year” and will “reinforce even more The market”.
“Should oil be used as a weapon, a real shortage could push prices up considerably,” says Tamas Varga. The current situation, however, does not indicate a serious shortage of Russian oil, tempers.
Source: BFM TV
