Oil prices continued their upward trajectory on Monday, buoyed by expectations of reduced supply from OPEC+ cuts and disruptions to Russian refineries, alongside positive Chinese manufacturing data signaling improved demand outlook.
Brent crude climbed by 25 cents, or 0.3%, to reach $87.25 a barrel by 0830 GMT, building on last week’s 2.4% increase. Meanwhile, U.S. West Texas Intermediate crude rose to $83.44 a barrel, up 27 cents, or 0.3%, following a robust 3.2% gain last week.
Trading volumes remained subdued as many markets observed closures for the Easter holidays. Both benchmarks marked a third consecutive month of gains in March, with Brent sustaining levels above $85 a barrel since mid-March.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, have committed to extending production cuts until the end of June, potentially tightening crude supply during the Northern Hemisphere’s summer.
Russian Deputy Prime Minister Alexander Novak announced on Friday that Russian oil companies would prioritize reducing output over exports in the second quarter to align with OPEC+ production cuts. Additionally, drone attacks originating from Ukraine have disrupted operations at several Russian refineries, further impacting Russia’s fuel exports.
Analysts at Energy Aspects emphasized the geopolitical risks to crude and heavy feedstock supplies, highlighting robust demand fundamentals for the second quarter.
According to the consultancy, nearly 1 million barrels per day (bpd) of Russian crude processing capacity has been offline due to the attacks, affecting its high-sulfur fuel oil exports processed at Chinese and Indian refineries.
In Europe, oil demand outperformed expectations, with a year-on-year rise of 100,000 bpd in February, according to Goldman Sachs analysts. This contrasts with their earlier forecast of a 200,000 bpd contraction in 2024, indicating stronger-than-anticipated demand trends.
