Oil Prices Rise as Supply Concerns Outweigh Demand Fears

A worker at an oilfield in Africa. (Getty)
A worker at an oilfield in Africa. (Getty)
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Oil Prices Rise as Supply Concerns Outweigh Demand Fears

A worker at an oilfield in Africa. (Getty)
A worker at an oilfield in Africa. (Getty)

Oil prices rose on Friday as concerns that a Russian ban on fuel exports could tighten global supply outweighed fears that further US interest rate hikes could dent demand, but they were still headed for their first weekly loss in four weeks.
Brent futures climbed 50 cents, or 0.5%, to $93.80 a barrel by 0350 GMT, while US West Texas Intermediate crude (WTI) futures gained 63 cents, or 0.7%, to $90.26 a barrel, said Reuters.
Both benchmarks were on track for a small weekly drop after gaining more than 10% in the previous three weeks amid concerns about tight global supply as the Organization of the Petroleum Exporting Countries and allies (OPEC+) maintain production cuts.
"Trading remained choppy amid a tug-of-war between supply fears that were reinforced by a Russian ban on fuel exports and worries over slower demand due to tighter monetary policies in the United States and Europe," said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.
"Going forward, investors will focus on whether the OPEC+ production cuts are being implemented as promised and whether the rise in interest rates will reduce demand," he said, predicting WTI to trade in a range of around $90-$95.
Russia temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states with immediate effect to stabilize the domestic fuel market, the government said on Thursday.
The shortfall, which will force Russia's fuel buyers to shop elsewhere, caused heating oil futures to rise by nearly 5% on Thursday.
"Crude oil bounced off a session low after Russia banned diesel exports, which included gasoline. The action reversed a downside movement in crude markets following the hawkish Fed decision on Thursday," said Tina Teng, an analyst at CMC Markets, in a note.
"However, mounting fears of a recession in the Eurozone could continue pressuring oil prices."
The US Federal Reserve on Wednesday maintained interest rates, but stiffened its hawkish stance, projecting a quarter-percentage-point increase to 5.50-5.75% by year-end.
That buoyed fears that higher rates could dampen economic growth and fuel demand while boosting the US dollar to its highest since early March, making oil and other commodities more expensive for buyers using other currencies.
The Bank of England mirrored the Fed and held interest rates on Thursday after a long run of hikes, but said it was not taking a recent fall in inflation for granted.
A European Central Bank (ECB) governing council member said the central bank will most likely keep interest rates stable at its next policy meeting.



US Energy Firms’ Deals with Iraqi Kurdistan ‘Null and Void’, Baghdad Says 

This file photo taken on October 17, 2017 shows excess flammable gasses burning from gas flares at the Havana oil field, west of the northern Iraqi city of Kirkuk. (AFP) 
This file photo taken on October 17, 2017 shows excess flammable gasses burning from gas flares at the Havana oil field, west of the northern Iraqi city of Kirkuk. (AFP) 
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US Energy Firms’ Deals with Iraqi Kurdistan ‘Null and Void’, Baghdad Says 

This file photo taken on October 17, 2017 shows excess flammable gasses burning from gas flares at the Havana oil field, west of the northern Iraqi city of Kirkuk. (AFP) 
This file photo taken on October 17, 2017 shows excess flammable gasses burning from gas flares at the Havana oil field, west of the northern Iraqi city of Kirkuk. (AFP) 

Iraqi Kurdistan announced deals worth $110 billion over their lifetime with US firms HKN Energy and WesternZagros on Tuesday, drawing swift opposition from Baghdad's oil ministry which deemed them "null and void".

Prime Minister Masrour Barzani announced the deals in a speech in Washington, a day after they were flagged by an adviser on social media.

"The regional government is fully committed to developing the energy sector, especially as our reforms represent a significant step towards securing round-the-clock electricity supplies for all residents ...We also hope to contribute to providing electricity to other areas in Iraq," Barzani said, according to a statement released by the Kurdistan government.

The deals involve the development of the Miran and Topkhana-Kurdamir gas fields in the northern Iraqi city of Sulaymaniyah.

"These contracts are null and void. Natural resources belong to all Iraqis, and any agreement to invest in them must be made through the federal government, not in defiance of the law and the constitution," Iraq's oil ministry said.

Control over oil and gas has long been a source of tension between Baghdad and Erbil.

In a ruling issued in 2022, Iraq's federal court deemed an oil and gas law regulating the oil industry in Iraqi Kurdistan unconstitutional and demanded that Kurdish authorities hand over their crude oil supplies.

The Kurdish region's Ministry of Natural Resources issued a statement in response to the Iraqi oil ministry asserting its right and authority to sign energy deals.

"These deals are based on contracts signed many years ago, which have also been upheld as legal and valid by Iraqi courts... The recent change has been in the operating companies, in accordance with the legal and contractual framework of the existing agreements," it said.

An oil ministry official said agreement signings in Washington were conducted without Baghdad's previous knowledge.

"Signing energy agreements without consulting with the central government will further complicate relations between Baghdad and Erbil and will impact efforts to resume the export of Kurdistan regional oil," said a senior oil ministry official, speaking on condition of anonymity.

Key to those exports is a pipeline running through Türkiye halted since March 2023 after the Paris-based International Chamber of Commerce ruled Ankara violated provisions of a 1973 treaty by facilitating Kurdish exports without Baghdad's consent.

Negotiations to resume Kurdish oil exports via the Iraq-Türkiye oil pipeline, which once handled about 0.5% of global oil supply, have stalled over payment terms and contract details.

Foreign energy companies have demanded clarification on repayment of debts accumulated between 2022 and 2023 and have and have sought contract guarantees, according to Iraqi and Iraqi Kurdish officials.