Worries over tighter oil supply drive price rises

By Zeynep Beyza Kilic

Oil prices increased on Monday with worries over tighter oil supply from tension in the Middle East and the Russia-Ukraine War.

International benchmark Brent crude traded at $87.24 per barrel at 9.31 a.m. local time (0631 GMT), a 32% rise from the closing price of $86.96 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $83.42 per barrel at the same time, an 0.30% increase from the previous session that closed at $83.17 per barrel.

As the conflict between Israel and Palestine and the Russia-Ukraine war continues, global energy supply concerns are put at risk, pushing prices higher.

Despite the United Nations Security Council's decision last week to establish an immediate cease-fire in the Gaza Strip, Israel continues its attacks by ignoring calls for a cease-fire.

Iran-backed Houthis in Yemen continue to target pro-Israeli ships passing through the Red Sea while the US and the UK retaliate by attacking Houthi assets.

On Friday, the US reported that it destroyed four unmanned aerial vehicles belonging to the Houthis in Yemen. The Houthis have declared their intention to keep attacking any ship that is connected to Israel as long as the US and UK continue their attacks on Houthi-controlled areas in Yemen.

Meanwhile, drone attacks on some refineries in Russia resulted in a temporary suspension of operations, putting the country’s export capacity into question and bolstering prices. Russian crude oil and refined products constitute approximately 8% of the global supply.

As a result of the attacks, Russian oil refineries will process less oil until they can operate at full capacity again, increasing tightness in the global refined oil product market and driving up jet and diesel fuel prices.

Experts predict that Brent oil prices may test $100 this year after Russia decided to reduce its oil production by 471,000 barrels per day for the second quarter of the year.