Oil prices go up as market weighs OPEC filling Russia’s supply gap

Oil prices rebounded on Thursday, following a dramatic dip the previous day, as traders pondered if major producers would increase supply to assist fill the output gap caused by sanctions imposed on Russia for its invasion of Ukraine.

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After trading in a more than USD 5 range, Brent crude futures were up USD 3.10, or 2.8%, at USD 114.24 a barrel. In the previous session, the benchmark contract fell 13%, its worst one-day plunge in over two years.

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US West Texas Intermediate (WTI) crude futures were up USD 1.58, or 1.5%, at USD 110.28 a barrel after trading in a more than USD 4 range. The contract had dropped 12.5% in the previous session, the most in a single day since November.

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Lack of certainty over where and when supply would come from to replace crude from the world’s second-largest exporter Russia in a tight market has resulted in a broad range of projections for oil prices ranging from USD 100 to USD 200 per barrel.

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“So to suggest the oil market is confused would be an understatement as we are in an unprecedented situation,” said Stephen Innes, managing partner at SPI Asset Management.

Comments from the United Arab Emirates energy minister and the country’s ambassador to Washington sent conflicting signals.

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UAE Energy Minister Suhail al-Mazrouei said late Wednesday on Twitter that his country is committed to the existing agreement by the Organization of the Petroleum Exporting Countries and allies, including Russia, known as OPEC+, to increase oil supplies by 400,000 barrels per day monthly following significant cuts in 2020.

“The UAE believes in the value OPEC+ brings to the oil market,” al-Mazrouei said.

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The comments from UAE officials came as the market considered measures by the US to remove sanctions on Venezuelan oil, as well as efforts to reach a nuclear deal with Tehran, which might result in additional oil supplies pouring from Iran later this year.

The market also took a breather ahead of Thursday’s talks in Turkey between Russia and Ukraine’s foreign ministers.