Oil prices rose on Thursday amid confusion over whether major producers would help to plug a gap in supplies from Russia.
The United Arab Emirates had appeared to push members of the Opec producer group to raise output, only for the UAE’s energy minister to quash hopes. The oil price rose more than 3%, after a 17% fall on Wednesday.
“To suggest the oil market is confused would be an understatement,” said analyst Stephen Innes.
US President Joe Biden and other leaders have pledged to try to ease the price pressures for households. Officials from the US have been in talks with oil producers aimed at boosting supply.
“We favour production increases and will be encouraging Opec to consider higher production levels,” Ambassador Yousuf Al Otaiba said in a statement tweeted by the UAE Embassy in Washington.
But the energy minister Minister Suhail al-Mazrouei said later that the Gulf state remained committed to the existing Opec monthly output agreement, which fixes how much crude is produced my member countries.
Oil prices have jumped more than 30% since 24 February, touching $139 (£105) a barrel at one point this week. The oil price had fallen back to about $106 a barrel at one point on Wednesday, but by Thursday morning it was trading at around $114.
On Tuesday, German Economy Minister Robert Habeck issued an “urgent appeal” to Opec oil producers to increase output “to create relief on the market”.
Saudi Arabia-led Opec and an extended group of oil producers called Opec+ – which includes Russia – have agreed to avoid a price war and keep control over the market.
Mr Innes, managing partner of SPI Asset Management, said: “So to suggest the oil market is confused would be an understatement as we are in an unprecedented situation.”
Commonwealth Bank commodities analyst Vivek Dhar said: “We think it will be challenging for Opec+ to boost production in this environment.”
Energy prices have been soaring for more than a year amid a rapid rebound in demand for oil, which had collapsed during the pandemic.
Russia’s invasion of Ukraine added new price pressures, as sanctions make it hard for the country – typically the producer of about 7% of global supplies – to find buyers for its oil.
The US and Canada have also announced bans on Russian oil imports, while the UK said it would phase them out by the end of the year.
The International Energy Agency (IEA) recently agreed to release 60 million barrels of oil from strategic national reserves, but that move is not enough to respond to the recent run-up in prices.
The agency said on Wednesday that oil reserves may be tapped further.
“If there’s a need, if our governments decide so, we can bring more oil to the markets, as one part of the response,” said IEA chief Faith Birol.
Source: bbc.com
