ISLAMABAD
Crude oil prices remained mixed on Wednesday as geopolitical tensions in the Middle East counter the chronic economic concerns.
As of 1210 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.1 (+0.13 percent) to reach $75.99 a barrel. However, the West Texas Intermediate (WTI), the main oil benchmark for North America, went down by $0.04 (-0.06 percent) to $70.34 a barrel.
Brent and WTI ended the last week lower by 3.93 percent and 2.6 percent respectively. Crude futures recorded their biggest annual drop since 2020 last year at a time of record US oil production and a slowdown in major economies. On an annual basis, Brent ended 2023 more than 10 percent lower, while WTI dropped by nearly 11 percent.
The prices of Russian Sokol, Arab Light and Opec Basket remained unchanged at 73.36, $82.03 and $80.84 a barrel respectively.
The weakness in oil comes despite a ratcheting up in tensions in the Middle East. While the geopolitical situation is a concern for the oil market, a fairly comfortable oil balance over the first half of 2024 does help ease some of these worries. The latest news in that respect was the arrival of an Iranian warship in the Red Sea over the weekend, which coincided with the latest attack by Yemen’s Houthis on a Maersk container ship, which sent a distress signal to the US Navy in the area and it sank three Houthi boats.
Some reports appeared to suggest the arrival of the Iranian ship had come in response to the sinking of the boats, which resulted in the death of 10 people, but some of the coverage claims the ship entered the Red Sea a day before the attack on the Maersk ship.
Meanwhile, OPEC said it would meet in February to discuss its ongoing production cut policy, with analysts noting that there is not more space left for additional cuts. Already, the last few rounds of cuts have been driven by voluntary reductions from individual members rather than group wide cuts – a sign that it is becoming more difficult to get all members on board to cut.
Some experts are of the view that there’s not really any disruption to the physical supply in the market related to events in the Red Sea. Markets look fairly balanced coming into the year, so it leaves OPEC with quite a lot of work to do to support prices at current levels, they added.
