Daily Times

Crude oil prices gained traction on Thursday due to geopolitical tensions as well as a fall in the US crude stockpiles.

As of 1250 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.70 (+0.87 percent) to reach $80.74 a barrel. Similarly, the West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.72 (+0.96 percent) to $75.81 a barrel.

Both Brent and WTI ended the last week higher by 0.34 percent and one percent, respectively. Both benchmarks shed more than 10 percent in 2023 on a year-on-year basis.

On the other hand, the price of Russian Sokol increased by $0.86 (+1.17 percent) to $74.12. Arab Light prices witnessed an increase of $0.93 (+1.16 percent) to reach $81.14 a barrel. Similarly, the price for Opec Basket decreased to $79.70 a barrel with a dip of $0.57 (-0.71 percent). The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey.

The US crude stockpiles decreased by 9.2 million barrels last week, the Energy Information Administration said. Moreover, geopolitical tensions in the Middle East also pushed the oil prices higher. In the latest blow to shipping around the key Red Sea corridor, Maersk said nearby explosions forced two ships operated by its US subsidiary and carrying US military supplies to turn around when they were transiting the Bab El-Mandeb Strait off Yemen.

A spokesman for Yemen’s Houthi military said they fired ballistic missiles at US warships protecting the two US commercial vessels. “We are finally seeing energy markets wake up to the distinct possibility that these supply chain disruptions will rumble on for months yet,” said Joshua Mahony, chief market analyst at Scope Markets, adding, “The prospect of a military solution to ensure safe passage looks unlikely.”

Oil prices also drew support from hopes for China’s economic recovery. China’s central bank announced a deep cut in bank reserves on Wednesday, in a move that will inject about $140 billion of cash into the banking system and send a strong signal of support for a fragile economy and plunging stock markets.