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Friday, Jan 21, 2022

Crude rally continues amid Kazakhstan turmoil

Crude rally continues amid Kazakhstan turmoil

Escalating tensions in the former Soviet state, together with Libyan outages, send futures surging
Global prices for crude oil saw a sharp increase on Thursday, extending the gains recorded during the previous session, as bloody unrest continues to sweep Kazakhstan, an OPEC+ oil producer.

The global benchmark Brent crude futures rose 0.38% to $82.30 per barrel, while US West Texas Intermediate crude futures also gained 0.38% to trade at $79.76 per barrel. Both contracts were trading at their highest since late November.

The latest increase comes as Kazakhstan – the second-largest oil producer in the former Soviet Union, with a daily output of around 1.6 million barrels – is shaken by violent anti-government protests. The nationwide unrest, which has resulted in numerous deaths, was initially prompted by a liberalization of road fuel prices.

On Thursday, US energy multinational Chevron, which operates the country’s primary oil field, Tengiz, reported a reduction in output, citing the disruption of train lines by some of its contractors in support of the protests.

“TCO production operations continue. However, there has been a temporary adjustment to output due to logistics,” Chevron, the largest foreign oil producer in Kazakhstan, with a 50% stake in the Tengizchevroil (TCO) joint venture, said in a statement.

To add to the Kazakh turmoil, Libyan oil output is reportedly down by more than 500,000 barrels per day (bpd) due to pipeline maintenance and oilfield shutdowns.

Earlier this week, OPEC+ – a group that includes members of the Organization of the Petroleum Exporting Countries, Russia, and other producers – agreed to add another 400,000 bpd of supply in February, as it has done each month since August.

Meanwhile, Saudi Arabia, the world’s number-one oil exporter, reportedly cut the official selling price for all grades of crude for its Asian clients in February by at least $1 per barrel.
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