Oil prices rose on supply risks from Venezuela, Iran, and Russia
Major oil producers are heightened by supply concerns stemming from unrest in Iran and the Russia-Ukraine war. Oil prices rose 2% on Friday due to increased supply concerns linked to escalating protests in Iran and increased attacks in Russia's war in Ukraine. However, rising global inventories could limit price increases.
Brent futures rose $1.35, or 2.18%, to $63.34 a barrel, while WTI rose $1.36, or 2.35%, to $59.12.
Both indicators rose more than 3% on Thursday after two consecutive days of decline. On a weekly basis, Brent is up about 4%, and WTI about 3%.
The unrest in Iran is unsettling the market. As internal unrest intensifies, concerns about potential disruptions to Iran’s oil production have increased, with protests against economic hardship taking place in major cities like Mashhad and Isfahan, as well as other parts of the country.
According to one study, the Organization of Petroleum Exporting Countries (OPEC) pumped 28.40 million barrels of oil per day last month; this is 100,000 barrels less than the revised total for November. Iran and Venezuela recorded the largest declines.
Concerns about the spread of the Russia-Ukraine conflict are also increasing supply anxieties. The Russian military announced on Friday that it had fired a hypersonic Oreshnik missile at targets in Ukraine. The Russian Defense Ministry stated that the targets included energy infrastructure supporting Ukraine’s military-industrial complex.
However, global oil inventories are rising, and the supply surplus remains a major factor that could limit gains.
Meanwhile, the White House was scheduled to meet with oil companies and traders Friday afternoon to discuss Venezuelan export deals.
Trump demanded that Venezuela grant the U.S. full access to its oil sector after Washington captured the country's leader, Nicolas Maduro, on Saturday. Trump administration officials said the U.S. would control Venezuelan oil sales and revenues indefinitely.
Oil giant Chevron, global trading companies Vitol and Trafigura, and other firms are competing for deals with the U.S. government to market up to 50 million barrels of oil that state oil company PDVSA has accumulated in its inventories during the severe oil embargo.
The market will focus on how the Venezuelan oil in storage will be sold and delivered in the coming days.
Baker Hughes, in its closely watched report released Friday, noted that the number of U.S. oil and gas drilling rigs, an early indicator of future production, fell by two this week to 544, the lowest level since mid-December.
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