ISLAMABAD
Oil prices closed out the week higher on the prospect of tightening crude supplies amid OPEC+ staying the course on production cuts, ongoing attacks on Russia’s energy infrastructure and a falling US rig count.
Major global benchmark Brent ended the week higher by 1.84 percent. Brent, the international benchmark for two-thirds of the world’s oil, went up to $87 a barrel from $85.43 a barrel during the week under review, showing an increase of $1.57 on a week-on-week (WoW) basis.
Similarly, the West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $2.13 (+2.63 percent) to $83.17 a barrel from $81.04 a barrel during the week.
Several members of the Opec+ group oil producers, including Saudi Arabia, the UAE and Kuwait, will extend oil output cuts as part of efforts to support market balance and stability. In total, Opec+ members are extending additional voluntary cuts of 2.2 million barrels per day to the end of second quarter.
Saudi Arabia will extend its voluntary cut of one million bpd through to the end of the second quarter of 2024. The production cap is in addition to the voluntary cut of 500,000 bpd announced by the kingdom in April 2023, which will remain in effect until the end of December 2024. The UAE will extend its additional voluntary cut of 163,000 bpd for the second quarter of 2024.
Other Opec+ members making the cuts include Iraq (220,000 bpd), Kuwait (135,000 bpd), Kazakhstan (82,000 bpd), Algeria (51,000 bpd) and Oman (42,000 bpd). In addition, Russia will cut 471,000 bpd during the second quarter both in terms of oil production caps as well as crude exports. This will be along with its voluntary cut of 500,000 bpd announced in April 2023, which extends until the end of December.
Meanwhile, attacks by Ukraine on Russian energy infrastructure have also boosted the sentiment around global crude supplies tightening and helped to support oil prices. So far this year, there have been strikes on two oil terminals, four oil and fuel depots, and 14 refineries.
The oil and gas rig count, an early indicator of future output, also fell by three to 621 in the week to March 28, according to energy services firm Baker Hughes.
On the local front, the price of petrol is poised to inflate by nearly Rs10 per litre due to a surge in international crude prices. The petrol price is likely to jack up to Rs289.69 per litre in the next fortnightly review from the current price of Rs279.75 per litre, as per the estimates of the oil industry. Meanwhile, the price of high-speed diesel (HSD) is estimated to decrease by Rs1.30 per litre to Rs284.26 from the current price of Rs285.86 per litre.
Similarly, the price of light diesel oil (LDO) is likely to increase by Rs0.45 per litre to Rs168.63 from the existing price of Rs168.18 per litre. The federal government will announce the final prices on Sunday which will take effect from April 1.
