After a storm affects Russian and Kazakh exports, oil prices climb

29 Nov 2023 , 10:21 AM

Oil prices increased on Wednesday as investors awaited an important decision by OPEC+, which may tighten or extend output restrictions, and as a storm in the Black Sea region interrupted oil deliveries from Kazakhstan and Russia, boosting concerns about a limited supply.

Brent crude futures were up 33 cents, or 0.4%, at $82.01 per barrel. West Texas Intermediate (WTI) oil futures for the United States increased by 45 cents, or 0.6%, to $76.86 a barrel.

The probability that the Organization of the Petroleum Exporting Countries and its allies, including Russia, could prolong or intensify supply curbs, along with worries about Kazakh oil output and a declining US currency, caused both benchmarks to rise by almost 2% on Tuesday.

Up to 2 million barrels per day (bpd) of oil exports from Kazakhstan and Russia have been affected by a strong storm in the Black Sea region, according to data from port agents and state officials.

The biggest oilfields in Kazakhstan are reducing their total daily oil production by 56% as of Nov. 27, according to the country’s energy ministry.

After postponing the meeting from November 26, OPEC+ is scheduled to convene an online ministerial conference on Thursday to deliberate on 2024 output targets.

According to four OPEC+ sources, the negotiations will be challenging and a continuation of the current accord rather than further reductions in output is a possibility.

A decline in U.S. crude stocks and the weakening of the dollar also helped to strengthen oil prices.

On Wednesday, the dollar remained close to a three-month low compared to its main competitors as speculation that the Federal Reserve may start cutting rates early in 2019 grows.

Oil prices are generally supported by a declining dollar since it becomes more affordable for people holding foreign currencies.

Meanwhile, market sources quoting data from the American Petroleum Institute reported that U.S. crude oil stockpiles decreased by 817,000 barrels last week.

In the week leading up to November 24, eight analysts surveyed by Reuters predicted that crude inventories had decreased by roughly 900,000 barrels on average. On Wednesday, the US government will release its weekly stockpile figures.

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