OPEC

Oil prices stabilized after rising for the fourth week, amid indications of tight supplies in the market, with the International Energy Agency warning of higher prices in the future.

West Texas Intermediate futures traded above $82 a barrel, after posting their longest weekly gain since June. The International Energy Agency said on Friday that the sudden production cut by “OPEC +” will make the market tighter than previously expected and lead to more price increases, inflicting more pain on consumers.

Oil rebounded after the banking crisis gripped the markets and pushed futures contracts to a 15-month low in mid-March. Shrinking crude stocks at the main US storage hub at Cushing and disruptions to supplies from Iraqi Kurdistan have created even more tight supplies in global markets.

“OPEC + cuts are clearly supportive of prices.. However, weaker refining margins are a concern, which indicates weak demand, especially for middle distillates,” according to Warren Patterson, head of commodity strategic analysis at IE. ING Groep NV.

Some Asian refiners are considering reducing crude oil processing operations as profit margins shrink, while there are signs of weakness in the diesel market that could exacerbate slowdown fears. That could cap gains in oil prices.

The production cut was announced on the eve of a meeting of Opec+ ministers. An expert quoted by the news agency Reuters, says the measure could lead to a “meaningful” price increase. “We are likely to see a price increase of $10 a barrel,” said Dan Pickering of investment firm Pickering Energy Partners. A higher oil price could help Russia finance the war in Ukraine.

In October last year, Opec+ had decided to cut production by 2 million barrels until the end of the year. An angry US president Joe Biden had then promised that the decision would have “consequences” for Saudi Arabia.

The new measure will take effect from May. Saudi Arabia is leading the way by cutting its output by 500,000 barrels by the end of this year. The United Arab Emirates, Kuwait, Iraq, Oman and Algeria are also reducing volumes.

Russia stated on Sunday that a unilateral production cut of 500,000 barrels per day, announced in February, will be extended until the end of 2023. The US government had seen that unilateral measure as a signal that the relationship between the Kremlin and the OPEC countries was weakening. . But that appears not to be the case for the time being.

The banking crisis caused a further fall in oil prices last month, to the lowest point in the past 15 months. But now prices have started to rise again. A barrel of North Sea oil was quoted just under $ 80 per barrel on Friday. Most experts therefore had not expected a change in production volume.