Oil prices in Asia rose for the third consecutive session on Wednesday, reflecting a tight supply situation due to disruptions in Kurdish crude shipments and a potentially large draw in US inventories. The price of Brent crude oil increased by 0.45% to $66.69 per barrel, while the price of West Texas Intermediate (WTI) crude oil rose by 0.36% to $63.21 per barrel.
Supply disruption in Kurdish crude shipments
One of the factors that drove the increase in oil prices is the supply disruption in Kurdish crude shipments. The Kurdish region of Iraq has been facing several challenges in exporting crude oil due to a dispute with the central government in Baghdad. The Kurdistan Regional Government (KRG) has been exporting crude oil independently through a pipeline to Turkey, but Baghdad claims that the oil belongs to the central government and has been demanding that the KRG hand over the control of the oil fields.
As a result of the dispute, the KRG has been facing difficulties in exporting crude oil, and this has led to a reduction in crude oil shipments from the region. This has created a tight supply situation in the market, which has pushed up the prices of crude oil.
Potential large draw in US inventories
Another factor that has contributed to the increase in oil prices is the potential large draw in US inventories. According to the American Petroleum Institute (API), US crude oil inventories fell by 2.6 million barrels in the week ending March 19, which is more than the expected decline of 900,000 barrels. The draw in inventories indicates strong demand for crude oil, which is a positive sign for the market.
The draw in inventories is expected to continue in the coming weeks as the demand for gasoline and diesel increases due to the reopening of the US economy. The US has been vaccinating its citizens against COVID-19, which has led to a decline in the number of cases and hospitalizations. This has given the market confidence that the demand for crude oil will continue to increase in the coming months.
The disruption in Kurdish crude shipments and the potential large draw in US inventories have created a tight supply situation in the market, which has pushed up the prices of crude oil. The market is also optimistic about the demand for crude oil due to the reopening of the US economy, which is expected to continue in the coming months. As the demand for crude oil increases, it is likely that the prices of crude oil will continue to rise in the near-term.