July 13, 2024

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Oil prices rise as supply uncertainty escalates

Oil prices rise as supply uncertainty escalates

An IPC Petroleum France oil pump at sunset outside Sodron, near Reims, France, August 24, 2022. REUTERS/Pascal Rossignol/File Photo

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LONDON (Reuters) – Oil prices rose on Monday as Iran’s nuclear talks appeared to face hurdles and a ban on Russian oil shipments loomed, with limited supplies struggling to meet still strong demand.

Brent crude futures rose 92 cents, or 1%, to $93.76 a barrel by 0910 GMT. US West Texas Intermediate crude rose 71 cents to $87.50 a barrel, or 0.8 percent.

Prices changed little last week as gains from a symbolic supply cut by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, the group known as OPEC+, were offset by a shutdown in China, the world’s largest importer of crude.

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France, Britain and Germany said on Saturday they had “serious doubts” about Iran’s intentions to revive the nuclear deal, in a development that could keep Iranian oil off the market and keep global supplies tight.

Global oil prices may rebound by the end of the year as supply is expected to shrink further when the European Union’s embargo on Russian oil comes into effect on December 5th.

The Group of Seven will implement a Russian oil price cap to limit Russia’s lucrative oil export revenue after its invasion of Ukraine in February, and plans to take measures to ensure the continued flow of oil to emerging nations. Read more

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In more negative news for markets, Chinese oil demand may contract for the first time in two decades this year, as Beijing’s COVID-free policy keeps people indoors during the holidays and reduces fuel consumption. Read more

“Continuing headwinds from China’s renewed virus restrictions and further moderation in global economic activities may still raise some reservations about a more sustainable rally,” said Jun Rong Yip, market strategist at IG.

The European Central Bank and the Federal Reserve are also prepared to raise interest rates further to tackle inflation, which could raise the value of the US dollar against currencies and make dollar-denominated oil more expensive for investors.

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Additional reporting by Florence Tan and Jeslyn Lear. Editing by Kenneth Maxwell and Louise Heavens

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