Oil increases as supply concerns are sparked by US sanctions and stockpile projections

13 Oct 2023 , 09:38 AM

Due to tighter sanctions against Russian crude shipments, which increased supply concerns in a competitive market, oil prices increased on Friday. Global inventories are expected to decrease through the fourth quarter.

U.S. West Texas Intermediate (WTI) crude climbed 53 cents, or 0.6%, to $83.44 a barrel, while Brent futures increased 36 cents, or 0.4%, to $86.36 per barrel.

After both contracts surged on Monday on the possibility of disruptions to Middle Eastern exports following Hamas’ attack on Israel over the weekend that threatened a potential wider conflict, Brent is expected to increase by 2.1% for the week while WTI is expected to increase by 0.8%.

Some of those gains were lost by prices during the week. However, to plug gaps in the system set up to sanction Moscow for its invasion of Ukraine, the U.S. levied the first sanctions on owners of tankers transporting Russian oil priced higher than the G7 price threshold of $60 per barrel on Thursday.

The increased U.S. monitoring of Russia’s shipments, which is the second-largest producer of oil in the world and a significant exporter, might reduce supply.

The Organisation of the Petroleum Exporting Countries (OPEC) maintained its projection for rise in global oil demand on Thursday as well, noting indications of a healthy global economy thus far this year and anticipated future increases in demand in China, the world’s largest oil importer.

For additional clues about the direction the second-largest economy in the world is taking, the markets are awaiting statistics on China’s producer price index, consumer price index, and trade activity in September, which are due later on Friday.

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