ISLAMABAD
Oil prices went up on Monday as investors focused on a tighter supply outlook after Moscow issued a temporary ban on fuel exports.
As of 1340 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.31 (+0.33 percent) to reach $93.58 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.28 (+0.31 percent) to $90.31 a barrel.
However, the price of Russian Sokol decreased by $0.62 (-0.71 percent) to $86.27. Arab Light prices witnessed a decrease of $0.39 (-0.40 percent) to reach $96.56 a barrel. On the other hand, the price for Opec Basket surged to $95.73 with an increase of $0.72 (+0.76 percent). The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey.
Moscow’s announcement last week, temporarily banning gasoline and diesel exports to most countries, has had a strong effect on market expectations. Analysts think that oil could hit $100 a barrel, for the first time in 13 months.
After a short pause last week, oil prices are on the rise again fuelled by Russia’s temporary ban. Crude oil prices have started the week on the front foot, as the market continues to digest Russia’s temporary ban on diesel and gasoline exports, into an already tight market, offset with the Fed’s hawkish message that rates will stay higher for longer. Oil prices fell about 1% to a one-week low on Wednesday after the US Federal Reserve left interest rates unchanged, but projected further rate increase by the end of the year.
An almost uninterrupted rise in oil prices in the past months keeps fueling inflation in the US and the EU and could make further rate hikes necessary. High rates could dampen demand and prices as a consequence. The Fed’s projection therefore snapped a three-week rally of more than 10% after Saudi Arabia and Russia constrained supply by extending production cuts to the end of the year.
