ISLAMABAD
Crude oil prices remained on an upward slide on Friday, extending gains since the US Federal Reserve hinted at the possibility of raising interest rates in future to bring down inflation.
As of 1245 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.92 (+1.06 percent) to reach $87.73 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $1.11 (+1.35 percent) to $83.57 a barrel.
Similarly, the price of Russian Sokol increased by $0.36 (+0.46 percent) to $79.48. Arab Light prices witnessed an uptickof $0.25 (+0.28 percent) to reach $89.36 a barrel. On the other hand, the price for Opec Basket decreased to $91.10 a barrel with a decrease of $0.50 (-0.55 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.
The US Federal Reserve announced its decision on the interest rate on Wednesday and held interest rates steady. The Fed has raised interest rates 11 times to its current range of 5.25 percent to 5.5 percent to rein in price increases without driving the economy into a recession.
Oil prices are headed for their second straight week of losses after the Israel-Gaza war remained contained.
Oil benchmarks have unwound some of the geopolitical premiums that were baked into prices as the Israel-Hamas war appears contained for the time being. Yet oil prices still retain the propensity for lurching higher if this conflict does broaden and actually disrupts global supplies.
The Israel-Gaza war appears to have been contained, with US President Joe Biden calling for a “pause” amid mounting domestic and global pressure to try to moderate Israel’s deadly response to the October 7 Hamas attacks.
The Hamas group’s deadly attack outside the Gaza Strip killed about 1,400 people, mostly civilians. Israel’s response has left more than 9,000 people dead in Gaza, according to local authorities.
Brent has given up most gains since the Israel-Gaza war broke out last month as diplomatic efforts have intensified amid a campaign to stop the war from spreading across the region, which could cause disruption to supplies. With supply-side risks being kept at bay for now, demand-side concerns have crept back on to the market’s radar, given China’s still-soft recovery. China’s economy has yet to fully recover even as the world’s second-largest economy and top crude importer eased coronavirus pandemic related restrictions earlier this year.
The International Monetary Fund expects growth in China to hit 5 per cent, slower than the previous 5.2 per cent projection, for 2023. The Chinese economy, which expanded by 3 per cent in 2022, is expected to grow by 4.2 per cent in 2024, a 0.3 percentage point reduction from earlier estimates.
