Oil rises as US sanctions, stockpile forecasts raise supply worries
- By Reuters -
- Oct 13, 2023
Oil prices rose on Friday after the U.S. tightened its sanctions programme against Russian crude exports, raising supply concerns in an already tight market, and global inventories are forecast to decline through the fourth quarter.
Brent futures rose 50 cents, or 0.6%, to $86.50 per barrel and U.S. West Texas Intermediate (WTI) crude gained 64 cents, or 0.8%, to $83.55 a barrel at 0345 GMT.
Brent is set for a weekly gain of 2.3%, while WTI is set to climb 0.9% for the week, after both contracts surged on Monday on the potential for disruptions to Middle Eastern exports after Hamas’ attack on Israel over the weekend threatened a possible wider conflict.
Prices gave back some of those gains during week. But, on Thursday, the U.S. imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of $60 a barrel, to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine.
Russia is the world’s second-largest oil producer and a major exporter and the tighter U.S. scrutiny of its shipments could curtail supply.
Also on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) kept its forecast for growth in global oil demand, citing signs of a resilient world economy so far this year and expected further demand gains in China, the world’s biggest oil importer.
“Supply side issues remained the focus in the crude oil market,” Daniel Hynes, senior commodity strategist at ANZ, said in a note on Friday, adding that prices during early trade on Friday rose on the stronger U.S. sanctions enforcement.
“Sentiment was also boosted after OPEC said it expects crude stockpiles to slump by 3 (million barrels per day) this quarter. That assumes that there are no further supply disruptions emanating from the Israel-Hamas war,” Hynes said.
Oil prices shrugged off data released on Friday showing a month-on-month decline in Chinese crude imports.
Imports last month were 45.74 million metric tons, or 11.13 million barrels per day, down 10.5% from the August level, which was the third-highest on record.
However, September imports were up 14% from a year earlier, continuing the trend seen through 2023, in which imports have significantly exceeded 2022 levels when China’s economy was hammered by widespread pandemic restrictions.