Oil prices heading for second consecutive weekly increase — EnergyWatch

Oil prices rise on Friday morning and continue towards the second consecutive weekly increase.

The imminent implementation of the previously announced Opec+ production cuts is providing support to oil prices, while continued tensions in the Red Sea are causing disruptions to the important transit route.

A barrel of the European reference oil, Brent, costs 80.08 dollars on Friday morning, compared to 79.17 dollars on Thursday afternoon. At the same time, US WTI oil is trading at 74.52 dollars compared to 73.68 dollars on Thursday afternoon.

Towards the end of the week, oil prices have risen by more than 4% for the second week in a row. According to Leon Li, an analyst at CMC Markets in Shanghai, oil prices may be on the road to recovery as a result of the implementation of production cuts from the Organization of the Petroleum Exporting Countries, Opec, and continued geopolitical conflicts, Reuters reports.

Saudi Arabia, Russia and other members of the Organization of the Petroleum Exporting Countries and their allies, Opec+, agreed at the last meeting to voluntary production cuts totaling around 2.2 million barrels per day in the first quarter of 2024.

However, on Tuesday, Angola’s oil minister announced that the organization no longer serves the country’s interests and that Angola is therefore leaving Opec. Angola has previously opposed the group’s decision to continue production cuts into 2024, and Angola’s decision to leave Opec now raises doubts about the group’s effectiveness in supporting prices, according to Reuters.

Tensions in the Red Sea have led to much shipping traffic being diverted following attacks on ships by the militant Houthi movement. Around 12% of the world’s trade normally passes through the Red Sea and the Suez Canal. On Tuesday, the US set up a multinational task force to protect shipping in the Red Sea, however, the Houthis have announced that they will continue attacks.

The impact on oil supplies has so far been limited, analysts tell Reuters, as the majority of the Middle East’s oil is exported via the Strait of Hormuz and not the Suez Canal.