Oil prices edge upward, bolstered by supply concerns

Tight global supplies and geopolitical tensions have boosted oil prices by about 15% so far this year. Demand remains on the upswing, with the Omicron coronavirus variation only temporarily denting consumption in major economies.

The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, agreed to stick to monthly increases of 400,000 barrels per day (bpd) in output despite pressure from consumers to raise supplies more quickly.

“With OPEC+ unwinding their production cuts, the group’s spare capacity will fall to low levels in 2022. Hopefully by next year there are no mobility restrictions, meaning with the world still expanding oil demand will also rise next year,” said Giovanni Staunovo, commodity analyst at UBS.

Goldman Sachs analysts forecast Brent topping $100 a barrel in the third quarter. The brokerage had predicted that OPEC+ may consider a faster unwinding of its production cuts

Several OPEC members are struggling to pump more despite prices being at seven-year highs.

Iraq pumped 4.16 million bpd of oil in January, below its limit of 4.28 million bpd under the OPEC+ deal, data from state-owned marketer SOMO seen by Reuters showed.

Analysts have looked to U.S. output as a salve, though overall production was at 11.5 million barrels per day in the most recent week, according to federal data. ConocoPhillips CEO Ryan Lance said Thursday that he now expects more production growth in the United States this year than he did a few weeks ago.

An explosion rocked an oil production vessel owned by Nigeria’s Shebah Exploration & Production Company Ltd (SEPCOL) with a 22,000 bpd capacity, the company said.

The blast is unlikely to have any major impact on output although Nigeria was already struggling to meet its production quota under the OPEC+ deal.

Cold weather forecasts for the central United States and parts of the Northeast also supported prices. read more