Oil prices rose on Friday morning as experts predicted it could take few weeks to clear Suez Canal blockage, one of the world’s most important waterways and busiest with nearly 19,000 ships or 51.5 ships per day in 2020, according to Suez Canal Authority.
Brent crude oil, the global benchmark for the Nigerian type of oil, gained $1.16 or 1.9 percent to $63.12 per barrel following a 3.8 percent decline on Thursday.
The U.S. West Texas Intermediate (WTI) crude oil rose by $1.25 or 2.1 percent to $59.81 per barrel, also after a 4.3 percent decline on Thursday.
Suez Canal blockade, one of the world’s busiest shipping channels for oil, grain and other commodities between Asia and Europe, may not be operational for weeks.
Therefore, officials have started stopping all ships from entering the canal on Thursday, according to a source familiar with the situation.
“Expectations that the blockage of the Suez Canal may last for weeks raised fears of supply tightness in oil markets,” said Nissan Securities researcher Yasushi Osada.
Also, the growing concerns regarding a fresh wave of lockdowns in Europe and other parts of the world drag on oil demand as factories are expected to shutdown with COVID-19 vaccine suspension in the Euro-area and rising wave of a new type of COVID-19.
“But lingering worries that a fresh wave of lockdowns in Europe and elsewhere may slow a recovery of global fuel demand are expected to limit price gains,” Osada said.
