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New Straits Times
3 days ago
- Business
- New Straits Times
Oil prices climb to 2-month high on Middle East supply risks, US-China trade deal
NEW YORK: Oil prices rose more than 3 per cent on Wednesday, to their highest in more than two months, after reports the United States is preparing to evacuate its Iraqi embassy due to heightened security concerns in the Middle East. Brent crude futures rose US$2.29, or 3.42 per cent, to US$69.16 a barrel at 2:13 p.m. EDT (1813 GMT). U.S. West Texas Intermediate crude was up US$2.52, or 3.88 per cent, to US$67.50. Both Brent and WTI reached their highest in more than two months. The United States was preparing to evacuate its Iraqi embassy due to heightened security risks in the region, sources said on Wednesday while a U.S. official said military dependents could also leave Bahrain. "The market wasn't expected this big geopolitical risk," said Phil Flynn, analyst at Price Futures Group. Iraq is the second-biggest OPEC producer behind Saudi Arabia. Iran's Minister of Defense Aziz Nasirzadeh said earlier in the day that Tehran will strike U.S. bases in the region if nuclear talks fail and conflict arises with Washington. Trump said he was less confident that Iran would agree to stop uranium enrichment in a nuclear deal with Washington, according to an interview released on Wednesday. Ongoing tension with Iran means its oil supplies are likely to remain curtailed by sanctions. Supplies will still increase, as OPEC+ plans to boost oil production by 411,000 barrels per day in July as it looks to unwind production cuts for a fourth straight month. "Greater oil demand within OPEC+ economies – most notably Saudi Arabia – could offset additional supply from the group over the coming months and support oil prices," said Capital Economics' analyst Hamad Hussain in a note. Also keeping prices elevated, Trump said Beijing would supply magnets and rare earth minerals and the U.S. will allow Chinese students in its colleges and universities. Trump added the deal is subject to final approval by him and President Xi Jinping. The trade-related downside risk in oil has been temporarily removed, although the market reaction has been tepid as it is not clear how economic growth and global oil demand will be affected, PVM analyst Tamas Varga said. In the U.S., crude inventories fell by 3.6 million barrels to 432.4 million barrels last week, the Energy Information Administration said on Wednesday. Analysts polled by Reuters had expected a draw of 2 million barrels. "It's a bullish report," said Bob Yawger, director of energy futures at Mizuho, adding that the demand for motor gasoline began to strengthen. Product supplied for motor gasoline, a proxy for demand, rose by about 907,000 barrels per day last week, to 9.17 million bpd. U.S. consumer prices increased only marginally in May, deepening the conviction in financial markets that the Federal Reserve will start cutting interest rates by September. Lower interest rates can spur economic growth and demand for oil.
Yahoo
28-01-2025
- Business
- Yahoo
Oil prices rebound from multi-week lows as investors brace for Trump tariffs
By Nicole Jao NEW YORK (Reuters) -Oil prices settled up on Tuesday, bouncing back from multi-week lows, after the White House said U.S. President Donald Trump's plans to issue tariffs on Canadian and Mexican imports this week still holds. Fears of weaker demand linked to soft economic data from China and rising temperatures elsewhere capped the gains. Brent crude oil futures settled up 41 cents, or 0.53%, at $77.49 per barrel. U.S. West Texas Intermediate crude futures were up 60 cents, or 0.82%, at $73.77. Brent settled on Monday at its lowest since Jan. 9, while WTI hit its lowest since Jan. 2. The White House said Trump still plans to issue 25% tariffs on Canada and Mexico on Saturday while weighing fresh tariffs on China. "Trump's comments on tariffs kept the market on edge," said Phil Flynn, analyst at Price Futures Group. The tariffs could disrupt the flow of energy products across the U.S. borders with Canada and Mexico. In Libya, local protesters prevented crude oil loadings on Tuesday at Es Sider and Ras Lanuf ports, putting about 450,000 barrels per day of exports at risk. However, fears of supply disruption eased after Libya's state-run National Oil Corp said export activity was running normally after it held talks with protesters. "The market priced in the risk of Libyan oil supply disruption before it became clear that flows for now are not disrupted, with the risk premium evaporating again," UBS commodities analyst Giovanni Staunovo said. "There remains a risk of new disruptions down the road," he added. In China, the world's largest crude oil importer, reported on Monday an unexpected contraction in January manufacturing activity, pressuring oil prices. "The general tone of caution in the risk environment, coupled with weaker Chinese PMI numbers that cast further doubt on China's oil demand outlook, may serve as a drag on oil prices," IG analyst Yeap Jun Rong said. China's crude oil demand is also expected to be hit by the latest U.S. sanctions on Russian oil trade. FGE analysts see refineries in Shandong losing up to 1 million barrels per day of crude supply in the near term amid a ban imposed by the Shandong Port Group on U.S.-sanctioned tankers. Several independent refineries in China have halted operations, or plan to do so, for indefinite maintenance periods, sources told Reuters, as new Chinese tariff and tax policies plunge plants deeper into losses. In the U.S., weather forecasts are for warmer-than-normal temperatures through this week, which are also weighing on demand for heating fuels after extreme cold sparked a natural gas and diesel rally in prior sessions. Oil markets remain jittery, and it will be some time before there is clarity on the ramifications of U.S. policy involving tariffs and sanctions, said Ashley Kelty, an analyst at Panmure Liberum. Sign in to access your portfolio
