Oil rises to $105 as supply fears persist despite reserves release
Oil prices reverse early losses and rise to over $105 a barrel on Monday in volatile trade as supply concerns continue from the Ukraine war and the lack of clarity on Iran oil, despite an expected supply boost from the release of strategic reserves by the US and the International Energy Agency (IEA).
Crude oil prices had extended their losses early on Monday, after the biggest weekly fall in two years last week on supply hopes.
Reflecting the wild gyrations in commodities’ prices since Russia invaded Ukraine, the benchmark Brent crude rose sharply by over 1 per cent to over $105 per barrel.
Crude prices recouped the loss of about $1 in early trade driven by a truce between the United Arab Emirates and the Iran-aligned Houthi group that would halt military operations on the border, alleviating some concerns about potential supply issues.
In addition, the US supply boost from its Strategic Petroleum Reserve (SPR) release had also weighed on oil prices.
But the invasion in February heightened supply concerns that were already underpinning prices.
Sanctions imposed on Russia and buyers’ avoidance of Russian oil have already led to a drop in output and raised fears of more significant losses.
Crude dropped by about 13 per cent last week after US President Joe Biden announced a record US oil reserves release and as International Energy Agency members committed to further tapping reserves. Crude had hit $139 last month, its highest since 2008.
Oil also gained support from a pause in talks to revive the Iran nuclear deal, which would allow the lifting of sanctions on Iranian oil. Iran on Monday blamed the US for the halt.
