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Oil price surges as IEA warns of supply shortage

On Thursday, oil prices rose by 3 percent after the International Energy Agency (IEA) warned that markets could lose three million barrels per day (bpd) of Russian crude and processed products starting in April.

The supply loss would be significantly more than the one million barrels per day decline in demand predicted as a result of rising fuel prices, according to an IEA assessment released on Wednesday.

After declining for three trading sessions, benchmark Brent crude futures rose $3, or 3.1 percent, to $101.09 a barrel at 0844 GMT.

West Texas Intermediate (WTI) crude in the United States went up $2.8, or 3 percent, to $97.84 per barrel.

Following an unexpected increase in US crude stockpiles and hints of progress in Russia-Ukraine peace talks, both futures closed lower the day before.

‘The market’s appetite for trading the geopolitical repercussions is waning, which is assisting in the squeezing of certain premium bubbles in oil prices. It’s time to re-evaluate many factors,’ chief researcher of the Guotai Junan Futures Co., Wang Xiao stated.

Prices had fallen in the previous session on news that US oil stocks increased by 4.3 million barrels to 415.9 million barrels in the week ending March 11, beating experts’ estimates of a loss of 1.4 million barrels, according to the US Energy Information Administration.

‘Questions about how much Russian oil will continue to swing, as well as concerns about how terrible crude demand destruction will grow,’ Edward Moya, a senior market analyst at OANDA, wrote in a note.

 

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