Oil prices capped off a strong first quarter in 2024, surging on the last day of trading. This bullish run comes after concerns about a global oil glut subsided thanks to production cuts by Russia.
Brent crude, the global benchmark, settled at $87.48 per barrel, reflecting a 1.6% jump. West Texas Intermediate (WTI), the U.S. oil benchmark, mirrored this trend, climbing 2.2% to settle at $83.17 per barrel. These gains capped off a remarkable quarter for oil, with both Brent and WTI recording increases of around 16% since the beginning of January.
The primary driver behind this price surge is the tightening grip on global oil supplies. Russia, a major oil producer, announced production cuts earlier in March, alleviating fears of a surplus in the market. This decision by Russia, coupled with ongoing production curbs by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, has created a more balanced supply-demand dynamic.
Adding fuel to the fire were recent attacks on Russian fuel refineries in Ukraine.
These disruptions further tightened global crude supplies, pushing prices upwards.
The oil price rebound is a welcome sign for energy companies after a period of volatility. Higher prices translate to increased revenue streams, potentially leading to higher profits and dividends for investors. Consumers, however, might feel the pinch at the pump, as gasoline prices are likely to reflect the rising cost of crude oil.
Looking ahead, the future trajectory of oil prices remains uncertain. The ongoing geopolitical situation in Ukraine and potential shifts in production policies by major producers will continue to influence the market. Additionally, global economic factors, such as the performance of major economies like China, will also play a role in determining oil demand and consequently, prices.
