Brent hits $87 a barrel on supply concerns

ISLAMABAD
Crude oil prices closed the week as investors see a tighter supply outlook ahead amid the OPEC+ production cuts.
Brent, the international benchmark for two-thirds of the world’s oil, gained $1.59 (+1.86 percent) to reach $87 a barrel. Similarly, the West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $1.82 (+2.24 percent) to $83.17 a barrel.
On the other hand, the price of Arab Light increased by $0.82 (+0.93 percent) to reach $88.78 a barrel. Similarly, the price of Russian Sokol increased by $1.06 (+1.33 percent) to $81.05 a barrel. On the other hand, the price for Opec Basket decreased to $84.98 from $85.92 a barrel with a dip of $0.94 (-1.09 percent).
Crude oil prices ended flat last week as Brent inched up to $85.43 from $85.34 a barrel, showing an increase of $0.09 on a week-on-week (WoW) basis. However, WTI closed the week down to $80.63 from $81.04 a barrel, registering a weekly decrease of $0.41 (-0.51 percent).
Several members of the Opec+ group oil producers, including Saudi Arabia, the UAE and Kuwait, will extend oil output cuts as part of efforts to support market balance and stability. In total, Opec+ members are extending additional voluntary cuts of 2.2 million barrels per day to the end of second quarter.
Saudi Arabia will extend its voluntary cut of one million bpd through to the end of the second quarter of 2024. The production cap is in addition to the voluntary cut of 500,000 bpd announced by the kingdom in April 2023, which will remain in effect until the end of December 2024. The UAE will extend its additional voluntary cut of 163,000 bpd for the second quarter of 2024.
Other Opec+ members making the cuts include Iraq (220,000 bpd), Kuwait (135,000 bpd), Kazakhstan (82,000 bpd), Algeria (51,000 bpd) and Oman (42,000 bpd). In addition, Russia will cut 471,000 bpd during the second quarter both in terms of oil production caps as well as crude exports. This will be along with its voluntary cut of 500,000 bpd announced in April 2023, which extends until the end of December.
Oil prices have risen by about 11 percent since the beginning of the year due to Opec+ supply cuts and geopolitical uncertainty arising from Ukrainian drone attacks on Russian oil infrastructure.