India and China have emerged as key buyers of Russian crude after many other buyers avoided it due to the Ukraine conflict. Russian oil has become South Asia's primary oil supplier, with Saudi Arabia's crude being the most expensive for Indian buyers in February, averaging $87.66 per barrel.
Oil prices remained steady on Monday after rising for three consecutive weeks. Looming supply cuts from Saudi Arabia and other OPEC+ producers offset concerns about slowing global growth, which could dampen fuel demand. Crude prices increased by over 6% last week, marking the third weekly gain since OPEC+ surprised the market with a new round of production cuts beginning in May. By 0816 GMT, Brent crude had fallen 3 cents to $85.09 per barrel, while West Texas Intermediate crude had risen 8 cents to $80.78.
Warren Patterson, the head of commodities research at ING, believes that prices will rise from here as the year progresses. He said, "Those who were bearish are questioning the demand outlook in light of the cuts, while clearly, those who were bullish are now seeing an even tighter market in the second half."
The shutdown of Iraq's northern exports has also contributed to supply constraints. Although the federal government of Iraq and the Kurdish Regional Government signed a temporary agreement last week to restart the flows, they had not resumed as of Thursday.
Oil was also boosted by a sharper-than-expected drop in US crude inventories last week, as well as a drop in petrol and distillate stocks, indicating rising demand. In global financial markets, a US inflation report due out on Wednesday could help investors forecast interest rate movements in the near term. Despite expectations that the Federal Reserve will slow rate hikes due to the recent banking crisis, borrowing costs may rise if inflation remains high.
Vandana Hari, the founder of oil market analysis provider Vanda Insights, stated that "This week's US data could be a drag on sentiment if strong numbers reinforce expectations of the Fed continuing on its tightening path, while weak numbers point to economic pain, which means risk-aversion grows in either case."
