The barrel price of Brent crude oil increased by 12.91 percent in the first quarter of the year

The barrel price of Brent crude oil saw a 12.91 percent increase in the first quarter of the year due to increased supply concerns amid turmoil in the Middle East and the Russia-Ukraine War. The barrel price of Brent crude oil, which was $76.86 at the beginning of the year, rose by 4.6 percent to $80.42 in January and by 1.65 percent to $81.75 in February.

Prices tested $87.1 in March, the highest level since November 2023, and rose by 6.16 percent to $86.79 throughout the month.

Thus, the price of Brent crude oil increased by 12.91 percent in the first 3 months of the year.

The barrel price of West Texas Intermediate crude oil also increased by 15.87 percent in the first quarter.

Russia’s capacity to export refined petroleum products may decrease Julien Mathonniere, Petroleum Markets Economist at the U.S.-based energy information company Energy Intelligence Group, said in an evaluation to AA that some refineries had to partially halt production after Ukrainian drones struck Russian oil refineries, which could lead to a decrease in the country’s capacity to export refined petroleum products.

Mathonniere noted that Russian crude oil and refined products still constitute about 8 percent of global supply, and if this possibility were to materialize, the tightening of the global refined petroleum product market could put upward pressure on jet and diesel fuel prices.

Pointing out that Russian refineries will process less oil until they start operating at full capacity again, Mathonniere said that there would be more crude oil waiting to be released into the market in the country as a result.

Mathonniere also said that if Russia decides to export more crude oil, it would violate the production and export quotas pledged to the OPEC+ group, stating, “Potential disobedience will prevent the OPEC+ group from providing more supplies this year, which will worry Saudi Arabia.”

Mathonniere said that due to sanctions, Europe imports Russian diesel fuels indirectly through various countries, adding:

“The price increase observed in the first quarter of the year is due to supply concerns for refined petroleum products rather than the crude oil market. Tensions between Russia and Ukraine continue to push oil prices upward due to concerns that imported diesel fuels’ capacity will decrease.”

“A permanent interruption in crude oil or refined petroleum products would be a boon for the OPEC group” Mathonniere said that the rise in oil prices in April would decrease, stating, “Currently, Brent prices are struggling to stay above $85 per barrel despite unmanned aerial vehicle attacks on Russian oil refineries. If more crude oil enters the market, oil prices will return to $80 per barrel.”

Highlighting that petroleum product inventories decreased by approximately 50 million barrels on a monthly basis in February and that OPEC managed to keep global crude oil stocks relatively tight by cutting production at the request of OPEC, Mathonniere said:

“The strategy of the OPEC+ group has partly paid off with the decrease in petroleum stocks due to geopolitical tensions. A permanent interruption in crude oil or petroleum products would be a boon for the OPEC group because it would facilitate the group’s cessation of product cuts and a return to the market. The only problem here will be trade ships avoiding the Red Sea.”

On the other hand, analysts at U.S. investment bank J.P. Morgan predict that Brent oil prices could test $100 this year after Russia decided to further reduce oil production by 471,000 barrels per day in the second quarter.

source: prepared by Melisa Beğiç

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