LONDON: Oil prices rose on Wednesday back towards five-month highs hit the previous day as Opec production cuts and US sanctions on Iran and Venezuela continued to tighten supply, although economic worries increased.
International benchmark Brent futures were at $70.92 per barrel at 09:00 GMT, up 31 cents, or 0.44 per cent, from their last close.
US West Texas Intermediate (WTI) crude oil futures were at $64.33 per barrel, up 35 cents, or 0.55 per cent, from their last settlement.
Oil markets have tightened this year because of US sanctions on oil exporters Iran and Venezuela, as well as supply cuts by the Organization of the Petroleum Exporting Countries and some non-affiliated producers including Russia, a group known as Opec+.
Brent and WTI crude oil futures have risen by around 30 per cent and 40 per cent respectively since the start of the year.
“The global oil market is clearly moving back towards balance thanks to Opec+ production cuts,” ING bank said.
The Dutch bank said the reduction was not only down to voluntary supply cuts, which the group started this year to prop up prices, but also involuntary curbs from Venezuela and Iran — which are exempt from the Opec cut pact — due to US sanctions.
“Declines from these two exempt countries account for almost 47 per cent of the reduction seen from Opec,” ING added.
But Russia’s role in the pact came into focus after a senior Russian official signalled Moscow might seek to raise output, though President Vladimir Putin indicated on Tuesday that current prices suited Russia.
“The Russian camp is increasingly coy about extending supply cuts. Suffice to say, this may throw a spanner in the works for a sustained price recovery,” said PVM analyst Stephen Brennock.
Not all regions are in tight supply, however.
US crude stocks rose by 4.1 million barrels in the week to April 5 to 455.8 million barrels. — Reuters