Oil prices edged up on Wednesday as the possibility of supply disruptions prompted by North America production losses provided some support amid expectations OPEC+ producers will stick to agreed output reductions.
Brent crude rose 54 cents, or 0.8 percent, to $64.63 a barrel. U.S. West Texas Intermediate (WTI) rose 64 cents, or 0.9%, to $61.45 a barrel.
There were several factors contributing to the rise in prices. A major development was the U.S. decision to halt Chevron from exporting Venezuelan crude oil. While Chevron can continue operations in Venezuela, it is now prohibited from exporting oil out of the country or expanding its activities. This move limits supply options for U.S. refiners seeking crude and adds pressure to the global market, which is already facing constraints.
And in Canada, wildfires in Alberta led to brief shutdowns of oil and gas production facilities. The fires have forced evacuations from parts of oil operations and are helping to reduce output and tighten supply. The threat from the wildfires underscores the current exposure of the country's energy infrastructure to natural disaster.
Behind all this, oil traders are navigating the swirling forces of the organization of the Petroleum Exporting Countries and its allied producer countries, collectively referred to as OPEC+. The group is supposed to meet this week. No immediate decision is expected at Wednesday's full-group meeting, though the broader coalition may hold another meeting on Saturday in a smaller format of just eight member nations to decide whether to boost production next month.
OPEC+ will be under pressure to step up supply, industry analysts say. The demand picture is looking up, particularly with the summer driving season around the corner for several countries. Meanwhile, non-OPEC+ production has been stagnant in the first half of the year. Added to the Canadian supply risk, the cry for more production is rising.
But some analysts are skeptical. Market analysts say the group is likely to raise production in July but may reconsider as the year goes on as the outlook for the world economy darkens and potential new supplies enter the market.
There is also the unknown impact of geopolitics. Continuing strains between the U.S. and Iran have been keeping sentiment in check. If nuclear negotiations between the two countries falter, sanctions on Iranian oil exports would remain in a position to restrict global supply further.
With all of these factors in consideration, oil markets continue to be volatile.
