IEA’s Report Helped to Boost Oil Prices

Oil prices benefited from the International Energy Agency’s (IEA) monthly report, but were still heading for weekly losses on inflation as well as U.S.-Iran which could boost global supplies.

Brent crude futures gained $1.01 or 1.1% to $92.42 a barrel at 12:03 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) added $1.15 or 1.3% to $91.03 a barrel.

Prices are on course for their weekly decline after seven consecutive weekly gains, nevertheless. 

The United Arab Emirates and Saudi Arabia could help to calm volatile oil markets if they pumped more crude according to the IEA. The agency also added that the OPEC+ alliance produced 900,000 barrels per day (bpd) below target in January. 

Saudi Arabia and the UAE have the most spare production capacity. So, they have the opportunity to improve the situation. 

Oil prices and main producers

The agency also raised its 2022 demand forecast by 800,000 bpd based on revisions to historical data. The International Energy Agency expects global demand to expand by 3.2 million barrels per day this year reaching an all-time record of 100.6 million bpd. 

This comes after OPEC said that world oil demand might rise even more steeply this year amid a robust post-pandemic economic recovery.

However, the prospect of an aggressive Federal Reserve interest rate hike and nuclear talks capped further gains in prices.

St.Louis Federal Reserve Bank President James Bullard made an interesting comment. Bullard said he wanted a full percentage point of interest rate hikes by July 1, following the release of U.S. inflation data. The consumer price index for January Jumped 7.5% compared with a year ago according to the Labor Department. 

Indirect talks between the United States and Iran resumed this week after a 10-day break. A nuclear deal could see the lifting of sanctions on Iran oil and ease global supply tightness.