Oil prices fell slightly during the morning trading of Thursday’s session, following limited gains achieved at the closing of the previous session.
By 5:34 GMT, Brent crude prices fell 0.36 percent to $89.15 a barrel, and US Texas crude fell 0.46 percent to $87.85 a barrel.
Oil prices closed Wednesday’s session with limited gains following the OPEC + group stuck to its plan for moderate production increases, despite pressure from large consumers to raise production at a faster pace.
The global benchmark Brent crude contracts ended Wednesday’s session, up 31 cents, to settle at $89.47 a barrel, while US West Texas Intermediate crude contracts increased six cents to close at $88.26 a barrel.
Brent has remained close to the level of $ 90 a barrel for a few days now, supported by continuing concerns regarding tight supply from major global producers and a steady increase in demand.
On Friday’s session, the two benchmark crudes recorded their highest levels since October 2014, as Brent touched $91.70, and US crude scored $88.84.
The US Energy Information Administration said Wednesday that US crude stocks fell by 1 million barrels last week, versus expectations for an increase of 1.5 million barrels. Distillate stocks also fell amid strong demand domestically and in export markets.
increase production
The 23 members of the OPEC + group, led by Saudi Arabia and Russia, announced on Wednesday a new slight increase in production, despite the rise in crude prices and geopolitical tensions shaking the markets.
These countries confirmed in a statement that they would increase their production by 400,000 barrels per day in March, the same amount as in previous months.
The group, which includes 13 members of the Organization of Petroleum Exporting Countries (OPEC) and their ten allies within the “OPEC +” agreement, had resisted US pressure to increase production in order to reduce prices.
The OPEC + alliance said in a statement following a ministerial meeting in the video department that the decision was taken “in light of the fundamentals of the current oil market and consensus on expectations.”
The group’s cautious approach dates back to the spring of 2021 as demand recovers following massive production cuts under Covid.
Edward Gardner, an expert at Capital Economics, said Wednesday’s announcement “was not surprising given that the group followed this approach strictly since it was originally agreed, and even in December when oil prices fell in the wake of the Omicron outbreak,” according to “AFP.”
He added, “What matters in the future is whether OPEC + is able to keep pace with the planned production increases.”
And the expert at Interactive Investor, Victoria Scholar, indicated that she expects an “additional rise” as a result of steadily continuing demand and the policy of “a very slight increase in production” followed by the “OPEC Plus” alliance.
geopolitical tension
The “OPEC Plus” alliance is facing difficulties in producing what is commensurate with the specified quotas with some of its members, such as Angola and Nigeria, who are unable to raise production, and other members such as Saudi Arabia and the UAE that are not willing to do so, according to Carsten Fritsch of Commerzbank.
According to a “Bloomberg” statistics, the total production of “OPEC +” increased in December by only 90,000 barrels per day, which is far below the target of 400,000 barrels per day.
Russian Energy Minister Alexander Novak told Rossiya 24 television that Russia respects its commitments.
However, he added, there are “a number of uncertainties” casting a shadow over demand as the coronavirus epidemic continues to spread.
The high level of geopolitical tension associated with a number of the most prominent oil-producing countries, such as Russia, Saudi Arabia and the UAE, contributed to the increase in prices.
The Iranian-backed Houthi rebels, who have repeatedly targeted Saudi Arabia, launched three missile attacks once morest the UAE last month, the last of which occurred on Monday.
The UAE participates in the Saudi-led military coalition in Yemen in support of the Yemeni government once morest the Houthis. In 2019, it withdrew its forces from the poor country that has been mired in armed conflict since 2014, but it remains an influential player in it.
In Europe, tension between Moscow and the West reached its highest level since the Cold War following Russia massed forces on its border with Ukraine.
Markets.com’s Neil Wilson said the tension “between Ukraine and Moscow will continue to raise (prices) as long as the situation gets worse.”