Oil rates rise amid expectations of continued supply cuts, geopolitical tensions
Date
5/29/2024 8:36:13 AM
(MENAFN) Oil rates experienced an uptick on Wednesday as anticipation mounted regarding the possibility of sustained production cuts by the world's leading oil producers. This increase comes amidst projections of heightened global demand due to anticipated growth in travel during the upcoming summer season. International benchmark brent crude saw a rise, trading at USD84.25 per barrel, reflecting a 0.37 percent increase from the previous session's closing price of USD83.94. Similarly, the American benchmark West Texas Intermediate (WTI) registered an uptick, trading at USD80.20 per barrel, indicating a 0.46 percent increase from its prior close at USD79.83 per barrel.
The surge in oil rates is primarily attributed to growing expectations that the OPEC+ group, comprising the Organization of the Petroleum Exporting Countries (OPEC) and its allies, will opt to extend voluntary crude oil supply cuts. These cuts, initially set at 2.2 million barrels per day, have played a significant role in stabilizing oil markets amidst fluctuations in demand and supply dynamics. The decision on whether to maintain these cuts is anticipated to be addressed at the OPEC+ meeting scheduled for June 2.
Simultaneously, escalating tensions in the Middle East, a key region for oil production and trade, have further buoyed oil rates. The ongoing conflict in the southern city of Rafah in the Gaza Strip, where Israeli attacks persist despite international appeals for restraint, has added geopolitical uncertainty to the market. This situation underscores the geopolitical risks inherent in the region, which has historically influenced oil price movements due to its strategic significance in global energy markets.
Amidst these developments, market participants are closely monitoring geopolitical events and OPEC+ negotiations for insights into future oil price trends. The intersection of supply dynamics and geopolitical tensions continues to shape market sentiment, with expectations of sustained production cuts and geopolitical uncertainties contributing to the current upward trajectory in oil rates.
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