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Business News/ Markets / Stock Markets/  Oil hits six-month high on tighter supply over Ukraine attack ahead of OPEC decision; Brent at $89/bbl
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Oil hits six-month high on tighter supply over Ukraine attack ahead of OPEC decision; Brent at $89/bbl

Oil supplies faced fresh supply threats from Ukranian attacks on Russian energy facilities and escalating conflict in the Middle East, which pushes prices higher.

Brent futures for June delivery were up $1.16, or 1.3 per cent, at $88.58 per barrel (AP Photo/Matias Delacroix) (AP)Premium
Brent futures for June delivery were up $1.16, or 1.3 per cent, at $88.58 per barrel (AP Photo/Matias Delacroix) (AP)

Global crude oil prices hit six-month high on Tuesday, April 2, with benchmark Brent rising above the $89 per barrel for the first time since October, although briefly, as the oil supplies faced fresh threats from Ukranian attacks on Russian energy facilities and escalating conflict in the Middle East. 

Brent futures for June delivery were up $1.16, or 1.3 per cent, at $88.58 per barrel after touching a peak of $89.08. US West Texas Intermediate (WTI) crude futures for May rose $1.23, or about 1.5 per cent, to $84.94, according to news agency Reuters. Coming to domestic prices, crude oil futures rose 1.14 per cent higher at 7,077 per barrel on the multi commodity exchange (MCX).

Also Read: FY24 Review | Brent rises 9% in last 12 months on OPEC cuts, Middle-East tensions; Will crude oil hit $100 in FY25?

Why are crude oil prices rising?

-A Ukrainian drone struck one of Russia's biggest refineries on Tuesday in an attack that Russia initially repelled. A Reuters analysis of images showing the impact of the attack suggest it hit the refinery's primary oil refining unit, which accounts for about half of the plant's total annual production capacity of 340,000 barrels per day (bpd).

-Russia, among the top three global oil producers and one of the largest exporters of oil products, has been contending with a spate of Ukrainian attacks on its oil refineries and has mounted its own attacks on Ukrainian energy infrastructure.

-In the Middle East, Iran has vowed to take revenge on Israel for an airstrike that killed two of its top generals and five other military advisers at the Iranian embassy compound in Damascus.

-Analysts said that Israel has been at war against Iran-backed Palestinian group Hamas in Gaza, but direct Iranian involvement could spark a "region-wide conflict with plausible impact on oil supply.

-An ecological organisation said that a European satellite had spotted an oil spill in the northern Caspian Sea near Kazakhstan's giant Kashagan oilfield.

-The surge in prices comes ahead of Wednesday's ministerial panel meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+. The panel is unlikely to recommend any change in oil output policy, OPEC sources told Reuters.

-The demand outlook rose slightly, as March data showed an expansion in Chinese manufacturing activity for the first time in six months and in the US for the first time in a year and a half, according to official data from both nations.

Also Read: Expert View | Oil market oversupplied with high US output, Brent seen at $87-$92 for 2024: ShareKhan's Mohammed Imran

Where are prices headed?

Crude oil prices witnessed high fluctuation but managed to extend gains and settled at a five-month high after the US GDP showed better than expected growth in the fourth quarter. The global oil supply conditions are also tight after the OPEC+ extended its output cuts for the second quarter and supply concerns from Russia after the attack on its oil refineries. 

‘’Strength in the US dollar index has been restricting gains. We expect crude oil prices to remain volatile this week amid volatility in the dollar index and geo-political tensions. Crude oil is having support at $82.80–82.10 and resistance is at $84.10-84.80 in today’s session. In INR crude oil has support at Rs6,910-6,830 while resistance is at 7,065-7,115,'' said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

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Published: 02 Apr 2024, 07:39 PM IST
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