Oil prices rose on Thursday following a sharp drop in the previous session as the market contemplated whether major producers would boost supply to help plug the gap in output from Russia due to sanctions for its invasion of Ukraine.
Brent crude futures were up $3.10, or 2.8%, at $114.24 a barrel while U.S. West Texas Intermediate (WTI) crude futures were up $1.58, or 1.5%, at $110.28 a barrel. In the previous sessions, the contract for both Brent and WTI Texas had crashed by over 10%.
Uncertainty over where and when supply will come from to replace crude from the world’s second largest exporter Russia in a tight market has led to wide ranging forecasts for oil prices between $100 and $200 a barrel.
Comments from the United Arab Emirates energy minister and the country’s ambassador to Washington sent conflicting signals, Reuters reports.
UAE Energy Minister Suhail al-Mazrouei said on Twitter late on Wednesday his country is committed to the existing agreement by the Organization of the Petroleum Exporting Countries and allies including Russia, together called OPEC+, to ramp up oil supply by 400,000 barrels per day monthly following sharp cuts in 2020.
Just hours before, prices slumped on comments from UAE’s ambassador to Washington saying his country will be encouraging OPEC to consider higher output to fill the supply gap due to sanctions on Russia after it invaded Ukraine. Russia calls its incursion a “special operation” to disarm its neighbour.
The comments from UAE officials came as the market also took into account moves by the United States to ease sanctions on Venezuelan oil and efforts to seal a nuclear deal with Tehran, which could lead to more oil supply coming from Iran later this year.
While UAE and Saudi Arabia have spare capacity, some other OPEC+ producers are struggling to meet their output targets due to underinvestment in infrastructure over the past few years, which will limit their ability to lift output further. Day before yesterday, global oil prices fell by the most in nearly 2 years after OPEC member the UAE said it supported pumping more oil into a market roiled by supply disruptions due to sanctions on Russia.