HOUSTON: Oil prices rose $2 on Monday after Iraq was forced to halt some crude exports from its semi-autonomous Kurdistan region, with an additional boost from steps to stem a potential banking crisis that could have hit oil demand.
Brent crude futures were up $2.27, or 3%, at $77.26 a barrel by 12:50 p.m. ET (16:50 GMT). West Texas Intermediate US crude rose $2.39, or 3.5%, to $71.68.
Brent gained 2.8% last week while WTI rebounded by 3.8% as jitters in the banking sector eased.
About half a percent of global oil supply, or 450,000 barrels per day (bpd), of crude exports from Kurdistan stopped on Saturday after a victory in an arbitration case confirmed Baghdad’s consent was needed to ship the oil from Turkey.
That could also force cuts to oil production in the Kurdistan region.
Meanwhile, First Citizens BancShares Inc said it will acquire deposits and loans of failed Silicon Valley Bank , closing one chapter in the crisis of confidence that has roiled financial markets.
“Oil prices are edging higher extending gains from the previous week as investors weighed up efforts by the authorities to calm concerns regarding the global banking system,” said Fiona Cincotta, Senior Financial Markets Analyst at City Index.
There are also hopes for extra support for bank funding after reports that US authorities were in early deliberations about expanding emergency lending facilities.
Wall Street equities also gained as the banking deal offered a respite after weeks of turmoil.
Oil prices also drew support from Russian President Vladimir Putin’s plans to station tactical nuclear weapons in Belarus.
The move is one of Russia’s most pronounced nuclear signals yet and a warning to NATO over its military support for Ukraine, which has called for a meeting of the UN Security Council in response. NATO slammed Putin for what it called his “dangerous and irresponsible” nuclear rhetoric.
Russia’s Deputy Prime Minister Alexander Novak has said Moscow is close to achieving its target of cutting crude output by 500,000 barrels per day (bpd) to about 9.5 million bpd.
Russia’s crude exports are expected to remain steady as it cuts refinery output in April, data from industry sources and Reuters calculations showed on Friday.
A European Union embargo has hit Russia’s oil products exports harder than crude exports. Tonnes of diesel are stuck on ships awaiting buyers.
On the demand side, China’s crude oil imports are expected to rise 6.2% in 2023 from last year’s level to 540 million tonnes, according to an annual forecast by a research unit of China National Petroleum Corp on Monday.
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