Oil prices climbed higher on Thursday fueled by supply shortages due to sanctions on Russia and reports of a halt in Russian and Kazakhstan oil exports for one and a half months via the Caspian Pipeline Consortium (CPC) from the Black Sea, before dropping over $2.
International benchmark Brent crude hit $123.75 in early trading before dropping to $120.88 per barrel at 0640 GMT for a 0.60% fall relative to the closing price of $121.60 in the previous session.
American benchmark West Texas Intermediate (WTI) cost $116.64 a barrel earlier in the day, before falling to $113.42 at 0640 GMT for a 1.31% decline after the previous session closed at $114.93 a barrel.
Oil price increases were limited due to the prospect of a positive outcome in the Iran nuclear talks, the results of which could see more Iranian crude on the market.
On Wednesday, White House national security adviser Jake Sullivan said the US and its allies made progress in Iran’s nuclear talks although issues remain.
Oil prices rose after the CPC suffered damage due to storms and bad weather in the Black Sea, halting output for over a month.
Reports that US commercial crude oil inventories decreased by 2.5 million barrels last week put further pressure on global markets, which are already struggling from supply shortages.
US oil inventories decreased by 0.6% during the week ending March 18 to 413.4 million barrels compared to the market expectation of a rise of 25,000 barrels.
US crude oil production, meanwhile, declined by 10,000 barrels per day (bpd) to approximately 12.03 million bpd during the same period.
Experts predict that the oil market contraction, along with the drop in US oil production and the continued decline in stocks, will continue to support the upward movement in oil prices.
Meanwhile, US President Joe Biden is due to participate in a series of meetings in Brussels beginning March 24, including a NATO summit and European Council meeting, where he is expected to announce additional sanctions on Russia.
By Zeynep Beyza Kilic