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Thursday, February 15, 2024

Pakistani oil prices to go up as international prices reach 2 year high

Brent crude has gained more than 45% this year; however, relief of sanctions on Iran's oil may change the situation.

Oil rose above $75 a barrel on Wednesday, reaching its highest since late 2018, after an industry report on US crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

The American Petroleum Institute reported that crude stocks fell by a bigger-than-expected 7.2 million barrels, two market sources said. Official inventory figures from the Energy Information Administration are due at 1430 GMT.

Brent crude rose $0.63, or 0.8%, to $75.44 by 1200 GMT, having touched its highest since October 2018 at $75.66. US West Texas Intermediate added $0.51, or 0.7%, to $73.36 and is close to its highest since October 2018.

Read more: OPEC’s oil price strategy fails miserably: What’s next?

“The uptrend is regaining momentum,” said Stephen Brennock at oil broker PVM. “Overnight, the API set a bullish backdrop.”

Brent has gained more than 45% this year, supported by supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) and as easing coronavirus restrictions boost demand.

Some oil industry executives are even talking of crude returning to $100, a level last reached in 2014.

“Underlying demand in the physical market means that any corrections lower will remain shallow and short,” said Jeffrey Halley, analyst at brokerage Oanda.

OPEC and allies, collectively known as OPEC+, meet on July 1. They have been discussing a further unwinding of last year’s record output cuts from August but no decision has been made on exact volumes, two OPEC+ sources said on Tuesday.

Global demand is set to rise further in the second half of the year, though OPEC+ also faces the prospect of rising Iranian supply if talks with world powers lead to a revival of Tehran’s 2015 nuclear deal.

Read more: OPEC observes oil market is under abrupt stress, supply will be disrupted

A retreat in the US dollar has also helped to prop up oil, making crude less expensive for buyers holding other currencies.

Reuters with additional input by GVS News Desk