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Global Oil Prices Surge as US Lawmakers Suspend Debt Ceiling

Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years.

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Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years. On the final vote, 149 Republicans and 165 Democrats backed the measure, while 71 Republicans and 46 Democrats opposed it.

Brent crude oil, against which Nigerian oil is priced, rose by 77 cents, or 1% to $75.05 a barrel by 9 am while U.S. West Texas Intermediate crude (WTI) was up 69 cents, or 1%, at $70.79.

Markets were reassured by a bipartisan deal to suspend the limit on the U.S. government’s $31.4 billion debt ceiling, which staved off a sovereign default that would have rocked global financial markets.

Earlier signals of a potential pause in rate hikes by the Federal Reserve also provided support to oil prices, not least by weighing on the U.S. dollar , making oil cheaper for holders of other currencies.

Investor attention is now fixed on the June 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, collectively called OPEC+.

OPEC+ in April announced a surprise cut of 1.16 million barrels per day in April, but the gains from that move have since been retraced and prices are below pre-cut levels.

But signals on any fresh cut have been varied, with Reuters reporting and bank analysts indicating that further output cuts are unlikely.

On the demand side, the U.S. Institute for Supply Management (ISM) said its manufacturing PMI fell to 46.9 last month, the seventh-straight month that the PMI stayed below 50, indicating a contraction in activity.

Manufacturing data out of China painted a mixed picture. Thursday’s better-than-expected Caixin/S&P Global China manufacturing PMI contrasted with the previous day’s official government data that reported factory activity in May had contracted to the lowest level in five months.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Brent Crude Approaches $86 Following Moscow Attacks

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Amid escalating geopolitical tensions following the devastating terrorist attacks in Moscow, global oil markets rose with Brent crude oil hitting a $86 price level.

The tragic events in the Russian capital, which claimed the lives of over 130 innocent civilians, sent shockwaves through international communities and rattled energy markets already grappling with supply uncertainties.

Speculation surrounding the attacks, claimed by the Islamic State but with hints of potential Ukrainian involvement from Russian President Vladimir Putin, intensified concerns about potential disruptions to oil supplies.

Also, ongoing drone strikes by Ukraine targeting Russian infrastructure further exacerbated worries about the stability of crude oil production and refining capabilities in the region.

The mounting geopolitical unrest in key oil-producing regions has injected a sense of urgency into the market, with investors closely monitoring developments for potential impacts on global supply and demand dynamics.

Despite recent fluctuations, crude oil is poised for a third consecutive monthly gain, buoyed by efforts from the OPEC+ alliance to maintain production cuts and bolstered by tightening US sanctions on Russian energy exports.

The bullish sentiment is further supported by positive commentary on the broader commodities outlook, with central banks signaling potential interest rate reductions to stimulate economic growth, thus underpinning industrial and consumer demand for raw materials.

Analysts remain cautiously optimistic about the trajectory of oil prices, citing a delicate balance between supply risks and supportive macroeconomic factors amidst the backdrop of geopolitical turmoil.

As Brent crude inches closer to the $86 threshold, market participants brace for continued volatility amid unfolding geopolitical developments.

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Indian Refiners Shun Russian Crude Carried by Sovcomflot Tankers Amidst US Sanctions

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Indian refiners have taken a bold stance by refusing to accept Russian crude oil carried on PJSC Sovcomflot tankers, citing stringent US sanctions.

This decision marks a significant shift in India’s energy strategy and underscores the profound impact of global politics on the oil trade.

The move comes in the wake of heightened scrutiny on Sovcomflot tankers following sanctions imposed by the US Treasury’s Office of Foreign Assets Control.

Designating Sovcomflot and identifying specific crude oil tankers, the US has intensified its efforts to clamp down on entities linked to Russia, particularly in the aftermath of the Ukraine invasion.

Indian Oil Corp., Bharat Petroleum Corp., Hindustan Petroleum Corp., Mangalore Refinery & Petrochemicals Ltd., and Nayara Energy Ltd. have all halted the acceptance of cargoes carried on Sovcomflot vessels.

This unified action underscores the severity of the situation, with refiners diligently scrutinizing tanker ownership to ensure compliance with sanctions.

The repercussions of this decision are reverberating throughout the oil market, leading to disruptions in the supply chain and altering trade dynamics.

With fewer tankers available to transport Russian crude, the pricing landscape has undergone a significant shift, with discounts narrowing to compensate for higher freight costs.

Despite the challenges posed by sanctions and supply chain disruptions, India remains a key player in the global oil market.

However, the decision to shun Russian crude on Sovcomflot tankers reflects a strategic recalibration in response to evolving geopolitical realities, underscoring the complex interplay between politics and energy security on the world stage.

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