Concerns Over Supply Support Oil Prices Near $109

Oil prices rose again on Wednesday in international markets, approaching the level of $109, supported by a decline in inventories in the U.S. and concerns over reduced supply from Russia and Libya.

In the London market, the price of a barrel increased by $1.46 compared to the previous close, reaching $108.71. Yesterday, it closed trading down $5.91.

In the U.S. market, a barrel in contracts for May delivery was traded at a price $1.50 higher, at $104.06. Yesterday, it closed trading down $5.65. In contracts for June delivery, it was up $1.51, with a price of $103.57.

Prices on both markets sharply fell on Tuesday after the International Monetary Fund (IMF) lowered its estimate for global economic growth by nearly a full percentage point due to the economic consequences of the Russian war in Ukraine. They also warned that inflation has become a threat to many countries.

– The weakening of growth and strengthening of inflationary pressures can only mean one thing: a cloud of stagflation has descended over the global economy –  explains Stephen Greenock from P.M.

Today, oil prices rose again, supported by the prospects of tighter supply due to sanctions on Russia, the second-largest oil exporter in the world and a key European supplier.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies produced 1.45 million barrels per day in March, less than they targeted, as Russian production began to decline following Western sanctions, the group’s report showed.

Concerns over supply were further supported by disruptions in supply from Libya and Kazakhstan.

Libya was forced to shut down production of 550,000 barrels per day due to a wave of blockades at major oil fields and export terminals, the National Oil Corporation announced on Wednesday.

Kazakhstan’s exports were reduced due to damage to the Caspian Pipeline Consortium (CPC) terminal in the Black Sea, which could resume full capacity as early as Wednesday, said Energy Minister Bloat Akchulakov.

The CPC pipeline and terminal deliver about 80 percent of Kazakhstan’s exports and are currently operating at half capacity.

Support for prices was also provided today by data showing a decline in crude oil inventories in the U.S. last week, by 4.5 million barrels, according to market sources citing data from the American Petroleum Institute (API), released on Tuesday.

The U.S. government will release official data during the day.

OPEC separately announced that the price of a barrel of its members’ reference basket was $110.52 on Tuesday, indicating that its price did not change significantly compared to the previous trading day.