Oil up as Suez Canal blockage fuels supply worries

Oil prices were up on Friday as rescue efforts to float the stranded container ship in the Suez Canal could take weeks, delaying around 40 oil and LNG tankers from making passage to deliver oil supplies to the market.

International benchmark Brent crude was trading at $62.64 per barrel at 0628 GMT for a 1.11% increase after closing Thursday at $61.95 a barrel.

American benchmark West Texas Intermediate (WTI) was at $59.33 per barrel at the same time for a 1.31% rise after it ended the previous session at $58.56 a barrel.

The Suez Canal Authority on Thursday resumed efforts to free the container ship that has been stranded in the Suez Canal since Tuesday. The vessel, Ever Given, ran aground causing a backlog of ships in the canal.

The Suez Canal is considered one of the most important canals and straits in the world, is the shortest shipping route between Europe and Asia, and is one of the main sources of foreign currency for Egypt. As rescue efforts continue in the canal, the authorities say it could take days to weeks to free the ship, raising fears of severe delays to oil supplies.

Meanwhile, expectations that OPEC+ will maintain its conservative approach to output in light of the recent oil price falls from the new coronavirus quarantines and stricter travel restrictions across Europe also supported prices. OPEC+ is scheduled to meet on April 1 to consider their output cuts for May.

However, the rise in the number of COVID-19 cases in Germany, France, Italy, the UK, Denmark, Greece, the Czech Republic, Spain, Belgium, Portugal, the Netherlands, and Ireland, followed by renewed restrictions and lockdowns, continue to limit the upward trend in prices.

The president of the European Commission warned Thursday that the EU is at the start of a third wave of the COVID-19 pandemic.

“We are at the start of the third wave in Europe, and in many European member states, infections are on the rise again, mostly due to the variant B117,” said Ursula von der Leyen.