ISLAMABAD: Oil prices fell for the fifth straight session on Wednesday ahead of the ministerial meeting of OPEC+, while a stronger US dollar and signals of increased supplies continued to weigh on the current tight supply and demand dynamics in the market. As of 1125 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, shed $1.61 (-1.77 percent) to reach $89.31 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went down by $1.69 (-1.89 percent) to $87.54 a barrel. TLTP
However, the price of Russian Sokol increased by $0.31 (+0.38 percent) to $82.57. Arab Light prices witnessed an increase of $0.30 (+0.32 percent) to reach $92.84 a barrel. On the other hand, the price for Opec Basket decreased to $93.56 with a decrease of $1.43 (-1.51 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 oil prices dropped heavily overnight as markets responded to rate hiking commentary from the US Federal Reserve officials. Fed Governor Michelle Bowman said on Monday that monetary policy in the world’s largest economy needs to stay restrictive for “some time” to bring inflation back down to the 2 percent target. Meanwhile, the latest jobs data from the United States suggested a still-tight labour market, sparking worry about the possibility of more rate hikes from the Fed, which pressured prices.
Moreover, signs of a rise in oil supplies that could partially ease the current tight supply dynamics in the market have also pulled prices back from recent highs. Iraq’s northern oil export route through Turkey will begin operations this week, Turkey’s Energy Minister said on Monday. “Within this week, we will start operating the Iraq-Turkey pipeline … which will be able to supply half a million barrels of oil [per day] to the oil market,” added Alparslan Bayraktar.
On the other hand, the market awaits the ministerial meeting of OPEC+ where the officials will discuss production policy. Most observers seem to expect no change to the current approach to price control although some analysts have speculated that the Saudis might decide to start rolling back their voluntary production cuts. Russia, meanwhile, said it would not set an end date for the fuel export ban it implemented last month to address a domestic market shortage.
