Brent crude oil prices are rising again: the main reasons
29 April 10:21
Brent crude oil prices are rising on Wednesday, April 29, continuing a multi-day rally as investors try to assess the implications of the UAE’s unexpected decision to leave OPEC. A resumption of flows from the Persian Gulf is not expected, as negotiations between Iran and the U.S. remain at an impasse, reports "Komersant Ukrainian", citing Reuters.
“Brent crude futures rose 0.23% to $111.52 per barrel, while WTI futures fell 0.23% to $99.7 per barrel,” the report states.
Brent has recorded gains for seven consecutive trading days. The June contract expires on Thursday, while the actively traded July futures rose 0.17% to $104.58 per barrel.
“The United Arab Emirates’ sudden announcement of its withdrawal from the Organization of the Petroleum Exporting Countries implies stronger supply in the market in the future, when one of the leading producers will no longer be bound by cartel quotas,” said Anh Pham of LSEG.
“However, the effect will not be immediate, as the additional barrels will not yet reach the market due to the ongoing blockade of the Strait of Hormuz,” he added.
U.S. President Donald Trump told aides that they need to prepare for a prolonged blockade of Iran, the Wall Street Journal reported on Tuesday, citing U.S. officials.
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Trump has decided to continue pressuring Tehran by stifling its economy, particularly its oil exports by sea, the WSJ article states. The closure of the Strait of Hormuz has led to a significant drawdown of oil from global reserves. According to experts, crude oil inventories fell by 1.79 million barrels over the week. Gasoline stocks fell by 8.47 million barrels, and distillate stocks by 2.60 million barrels.
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What led up to this
As a reminder, yesterday, April 28, the UAE announced its withdrawal from OPEC and OPEC+ at the worst possible moment for the oil cartel—while the war with Iran is paralyzing supplies through the Strait of Hormuz.
The timing of the withdrawal is extremely painful for OPEC. Gulf countries have already faced difficulties exporting through the Strait of Hormuz—a narrow sea passage between Iran and Oman.
The UAE’s withdrawal is a major victory for U.S. President Donald Trump. He has long criticized OPEC, accusing
