Oil prices rise over US decision to refill strategic petroleum reserves

By Duygu Alhan and Firdevs Yuksel

Oil prices increased on Friday following the US announcement that it would replenish its Strategic Petroleum Reserves (SPR) amid escalating geopolitical tensions in the Middle East.

International benchmark crude Brent traded at $93.35 per barrel at 11.27 a.m. local time (0827GMT), a 1.05% rise from the closing price of $92.38 a barrel in the previous trading session on Thursday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $89.42 per barrel, up 1.19% from Thursday’s close of $88.37 per barrel.

Both benchmarks rose in early Asian trade on Friday due to the US Department of Energy's (DOE) plan to add a total of 6 million barrels to its SPR between December 2023 and January 2024.

In an effort to combat high gasoline costs following the commencement of the Russia-Ukraine war in February last year, the US administration withdrew around 200 million barrels of oil from the SPR, resulting in a 40-year low in inventories.

Meanwhile, escalating geopolitical tensions in the Middle East as a result of Israel's actions against Palestine are continuing to drive up prices by boosting supply fears.

Market players are trying to assess the possible spillover of the conflict to other countries and its impacts on crude oil supply routes. The ongoing conflict is generating fears of deepening the supply deficit predicted for the rest of the year.

Moreover, the weakening dollar following US Federal Reserve Chair Jerome Powell's remarks on Thursday, in which he said that lower economic growth is required to curtail high inflation, also put upward pressure on oil prices.