Oil prices saw an uptick in early Asian trade on Wednesday, driven by concerns over tightening global crude supply ahead of a meeting of OPEC+ ministers. Brent crude oil futures rose by 6 cents to reach $90.98 per barrel, while U.S. West Texas Intermediate crude (WTI) increased by 11 cents to $89.34 per barrel.
Saudi Arabia’s Price Increase
Saudi Arabia is anticipated to boost its official selling price of Arab Light crude to Asia for the fifth consecutive month in November, as reported by a Reuters survey. This move suggests continued tightening of crude supply from the world’s largest oil exporter.
Russia’s Export Ban
Russia has implemented a fuel export ban, with no specified time frame for its duration. The ban, introduced last month, will remain in place as long as needed to stabilize prices and address shortages in the domestic market, according to Deputy Prime Minister Alexander Novak.
U.S. Crude Stockpiles Decline
In the U.S., industry data indicated a drop in crude stocks of approximately 4.2 million barrels for the week ending September 29, according to sources citing American Petroleum Institute figures. Official government data on stockpiles is expected on Wednesday, with analysts estimating an average decline of about 500,000 barrels for the same week.
Impact of Strong Dollar and Political Turmoil
Oil prices have faced pressure due to the recent strength of the U.S. dollar, which reached a 10-month high against major peers. This strength is driven by data indicating a tight labor market, potentially leading the Federal Reserve to consider raising interest rates next month. Higher interest rates and a stronger dollar can make oil more expensive for holders of other currencies, potentially dampening oil demand.
Additionally, political turmoil in Washington has added to market uncertainty, as Republicans in the U.S. House of Representatives ousted their leader, causing disruptions in Congress shortly after averting a government shutdown. These geopolitical factors are being closely monitored by investors for their potential impact on oil prices.
