Crude oil prices clawed back some losses on Thursday after tumbling more than 5 percent to a three-week low in the previous session after consuming nations announced a huge release of oil from emergency reserves to offset supply lost from Russia. As of 1200 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $2.12 (+2.10 percent) to reach 103.19 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, jumped to $98.53 a barrel, up by $2.30 (+2.39 percent).
The price for Opec basket was recorded at $106.13 a barrel with a decrease of 1.78 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.
Arab Light was available at $106.85 a barrel with a decrease of 4.02 percent and the price of Russian Sokol slipped to $92.80 a barrel with a 4.09 percent decrease.
The International Energy Agency (IEA) member countries on Wednesday agreed to release 60 million barrels on top of a 180 million-barrel release announced by the United States last week to help drive down prices in a tight market following Russia’s invasion of Ukraine. However, even with the emergency oil stocks release, supply remained tight. The thinking behind this strategy is to add additional oil supply into the market since the majority of oil producers are already producing at, or near, their maximum capacity. The latest strategic release supports the strong political stance against Russia’s invasion of Ukraine and reluctance to accept Russian oil but questions remain over whether it will be enough to fill the overall supply shortage. The combined releases should add a little over 1 million bpd while the gap from sanctioned Russian oil amounts to around 2 million bpd.
On the topic of additional oil supply, at the end of last month OPEC decided to increase its output target for May by an additional 432,000 barrels per day instead of the usual monthly increase of 400,000 bpd. It remains to be seen whether such levels can be achieved in reality as a number of OPEC members have underproduced due to lack of investment or capacity constraints.