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Oil prices rise again ahead of Opec+ talks on Wednesday

By Eva Levesque
An employee inspects a well head in the Yarakta oil field in Siberia. Russia's oil output has been hit by Ukrainian drone attacks on facilities Reuters/Vasily Fedosenko
An employee inspects a well head in the Yarakta oil field in Siberia. Russia's oil output has been hit by Ukrainian drone attacks on facilities
  • Brent gained 15% in Q1
  • West Texas Intermediate up 10%
  • Signs of recovery in China

Crude oil prices consolidated on Monday, following a run of increases in the first quarter, fuelled by signs of recovery in China, tighter supplies by the Opec+ producers and geopolitical tensions.

Brent was trading slightly higher at $87.28 a barrel in the morning, while West Texas Intermediate rose to $83.45.

Brent has gained about 15 percent over Q1 and WTI is up about 10 percent. Analysts expect this upward trend to continue into the second quarter.

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“We’re looking for new all-time highs,” Omar Najia, global head of derivatives at BB Energy, told the Gulf Intelligence podcast on Monday. “The trend is higher [for oil], as is the trend in gold, S&P, bitcoin and inflation.”

Ole Hansen, Saxo Bank’s head of commodity strategy, said in a note last week: “Crude oil continues to be supported by geopolitical uncertainty amid Ukraine drone attacks on Russian oil infrastructure, extended Opec+ production cuts, including Russia’s recent pledge to make extra cuts and signs of gasoline consumption strength.” 

Russian oil processing capacity is down almost 1 million barrels per day (bpd) as a result of the strikes on its refineries.

Elevated tensions in the Middle East are also underpinning oil prices.

On the demand side, the outlook benefits from an increase in manufacturing activity in China, the world’s largest crude importer. The rise in March was the first in six months.

In Europe, annual oil demand was up 100,000 bpd in February, a higher than expected increase. Goldman Sachs has forecast a 200,000 bpd contraction in 2024.

US oil production dropped 6 percent in January, according to data from the Energy Information Administration.

Opec+ will hold an online ministerial committee meeting on Wednesday. Market observers expect the oil producers’ group led by Saudi Arabia and Russia to maintain its output policy, in an attempt to push prices higher.

Opec+ has extended its output cuts of 2.2 million barrels per day until the end of June, as the impact of its supply curbs is offset by increased production from outside the bloc.

Investors are also watching for interest rate cuts from the US Federal Reserve, which will boost the global economy and oil demand.

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