Oil prices rise on US sanctions, inventory concerns

October 13, 2023 (MLN): Global oil prices rose on Friday amid the implementation of stricter U.S. sanctions on Russian crude exports, coupled with expectations of a decline in global crude inventory throughout the fourth quarter.

Brent crude is currently trading at $85.84 per barrel, up by 0.28% on the day.

While West Texas Intermediate crude (WTI) is trading at $82.53 per barrel, up by 0.15% on the day.

It is pertinent to note that oil prices are on track for a weekly gain after three consecutive weeks of losses.

Brent Crude has risen by 2.47% for the week, while WTI has climbed by 1.17% during the same period.

Prices gave back some of those gains during the week. But, on Thursday, the U.S. imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7's price cap of $60 a barrel, to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine, as Reuters reported.

Russia is the world's second-largest oil producer and a major exporter and the tighter U.S. scrutiny of its shipments could curtail supply.

Also on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) kept its forecast for growth in global oil demand, citing signs of a resilient world economy so far this year and expected further demand gains in China, the world's biggest oil importer.

"Supply-side issues remained the focus in the crude oil market," Daniel Hynes, senior commodity strategist at ANZ, said in a note on Friday, adding that prices during early trade on Friday rose on the stronger U.S. sanctions enforcement.

"Sentiment was also boosted after OPEC said it expects crude stockpiles to slump by 3 (million barrels per day) this quarter. That assumes that there are no further supply disruptions emanating from the Israel-Hamas war," Hynes said.

Oil prices shrugged off data released on Friday showing a month-on-month decline in Chinese crude imports.

Imports last month were 45.74 million metric tons, or 11.13m barrels per day, down 10.5% from the August level, which was the third-highest on record.

However, September imports were up 14% from a year earlier, continuing the trend seen through 2023, in which imports significantly exceeded 2022 levels when China's economy was hammered by widespread pandemic restrictions.

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