Continued oil price rise over tightening supply woes

Continued oil price rise over tightening supply woes

/ Oil & Gas / Monday, 24 January 2022 10:39

Oil prices rose on concerns surrounding supply disruption even as geo-political tensions in Eastern Europe and the Middle East persist, while OPEC and its allies continued to struggle to raise output.

Brent crude futures rose 81 cents, or 0.9%, to $88.70 a barrel, reversing a 0.6% loss on Friday.

US West Texas Intermediate (WTI) crude futures gained 72 cents, or 0.9%, to $85.86 a barrel after a fall of 0.5%.

Both benchmarks rose for a fifth week in a row last week, gaining around 2% to hit their highest since October 2014. Prices are already up more than 10% this year on the concerns over tightening supplies.

Apart from Easter Europe and Middle East, higher heating oil demand in the United States amid cold weather have also contributed to the tight supplies, as per analysts.

A senior British government minister has warned Russia of severe economic sanctions if it installs a “puppet regime” in Ukraine. In the Middle East, the United Arab Emirates' defence ministry has confirmed of destroying two Houthi ballistic missiles targeting the Gulf country on Monday, with no casualties, according to state news agency (WAM) report.

The OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) with Russia and other producers, is struggling to hit its monthly output increase target of 400,000 barrels per day (bpd).

OPEC+ compliance with long-installed oil production cuts rose to about 122% in December, two sources from the producer group told Reuters, indicating that some members continue to struggle to raise their output.

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