Oil closes higher on supply-side fears after Turkey earthquake

Oil futures closed higher after supply-side fears, after a strong earthquake in Turkey disrupted operations in the country’s main oil export hub, boosted the commodity. In addition, the reopening of China continues to spark optimism about demand. On the other hand, gains were stalled by the strength of the dollar, which advances against rivals as the market is still contaminated by the prospect that the Federal Reserve (the US central bank) may have to keep interest rates high for longer. time than expected.

On the New York Mercantile Exchange (Nymex), WTI oil for March 2023 closed up 0.98% ($0.72), at $74.11 a barrel, while Brent for April, traded on the Intercontinental Exchange (ICE), rose 1.31% ($1.05) to $80.99 a barrel.

According to the Reutersthe strong earthquake, which also hit Syria, disrupted operations in Ceyhan and also disrupted major crude oil flows from Iraq and Azerbaijan.

The Tribeca shipping agency said in a notice that the BTC terminal in Ceyhan, which exports crude oil from Azerbaijan, will be closed until Wednesday.

Oanda analyst Craig Erlam points out that oil prices rose on Monday “with some factors potentially behind the movement”. “Turkey’s decision to temporarily stop flows to the Ceyhan terminal may have raised prices slightly, although with reports of no damage to the pipelines, the impact should be marginal. There is also a growing expectation that China will recover strongly after the decision to remove the zero covid restrictions, which will stimulate more demand throughout the year and increase prices”, he analyzes.

Saudi Arabia modestly raised prices for the benchmark grade of crude it sells to buyers in Asia and the US, significantly boosting prices for European consumers. According to Robbie Fraser, of Schneider Electric, such an increase would be a sign “that the confidence around stronger Chinese demand remains”, he said, in a note referring to one of the reasons for the increase in prices.