Brent at one-week highs with backing from supply disruptions

Front-month ICE Brent has extended its rally by leaping $2.26/bbl higher on the day, to $84.70/bbl at 09.00 GMT.

PHOTO: The Ceyhan Oil Terminal is operated by Turkish state-owned Botas and receives oil from the Baku-Tbilisi-Ceyhan oil pipeline for loading onto tankers for export. BP

Upward pressure:

Russian oil production will decline from nearly 11 million b/d in 2022, to 9.9 million b/d this year, the US Energy Information Administration (EIA) forecast in its short-term energy outlook report. The EU’s ban on imports of refined Russian oil products that began on 5 February could be more disruptive than its ban on Russian crude oil imports from December last year, the EIA says.

Commercial US crude stocks were drawn by 2.18 million bbls, according to an estimate by the American Petroleum Institute (API). Official EIA numbers are due for release as normal at 15.30 GMT today and could provide more market direction.

The Ceyhan Oil Terminal in Turkey, which can export up to 1 million b/d of crude, was forced shut after an earthquake wreaked havoc in Turkey and Syria at the beginning of the week. The supply disruption has helped propel Brent up to one-week highs.

Downward pressure:

Turkey’s state-owned Botas, which operates the Ceyhan terminal, has said oil pipeline flows from Iraq to Ceyhan restarted late on Tuesday and that a tanker was loading oil from storage. Flows through the Azeri pipeline running from Baku-Tbilisi-Ceyhan are still halted, Reuters reports.

The EIA predicts Brent to average $85/bbl in the first half of this year, before declining to $82/bbl in the second half, and further to about $78/bbl in 2024. The rise in global oil production will lead to inventory build-ups, keeping a lid on the Brent spot price, the EIA said.

By Erik Hoffmann

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