Oil posts biggest monthly gain in a year due to tight supply and political tensions

Oil pump cylinders are seen at the Vaca Muerta shale oil and gas field in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian/File Photo

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  • Benchmarks climb around 17% in January, the biggest jump since February 2021
  • OPEC+ expected to stick to output boost target
  • OPEC struggles to meet target
  • Energy security at center of impasse in Ukraine

NEW YORK, Jan 31 (Reuters) – Oil prices rose on Monday through the end of January with their biggest monthly rise in a year, spurred by a supply shortage and political tensions in Eastern Europe and the Middle East.

The most active Brent contract, for April delivery, traded 74 cents higher, or 0.8%, to settle at $89.26 a barrel. The first-month contract, for March delivery, which expired at the end of the session, rose $1.18, or 1.3%, to end at $91.21.

U.S. West Texas Intermediate crude rose $1.33, or 1.5%, to close at $88.15 a barrel.

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The benchmarks on Friday posted their highest levels since October 2014, at $91.70 and $88.84, respectively, and their sixth consecutive weekly gain. They have gained around 17% this month, the most since February 2021.

Market analysts and Reuters sources widely expect OPEC+, which includes the Organization of the Petroleum Exporting Countries and its Russian-led allies, to stick to its policy of gradually increasing oil. production at its meeting on Wednesday. Read more

OPEC+ producers have increased production by 400,000 barrels per day every month since August.

The “month-to-month supply increases of 400,000 bpd are either too immaterial for the market to appreciate and, more importantly, are not fully met by the group,” Louise Dickson said. , senior oil market analyst at Rystad Energy.

“The only short-term solution to balancing the oil market in short supply will therefore have to come from OPEC+, and be led by Saudi Arabia, the producer with the most spare capacity.”

However, OPEC oil output in January was again lower than expected under a deal with allies, a Reuters survey has found, highlighting the difficulty some producers have pumping more even as prices are trading at a seven-year high.

Geopolitical tensions involving major oil producers Russia and the United Arab Emirates escalated in January.

The NATO chief said on Sunday Europe needed to diversify its energy supplies, with Britain warning it was “highly likely” that Russia would seek to invade Ukraine. Read more

The market is also on high alert in the Middle East after the United Arab Emirates said it intercepted a ballistic missile fired by Houthis from Yemen as the Gulf state hosted Israeli President Isaac Herzog, on a first visit by this guy. Read more

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Reporting by Stephanie Kelly in New York; additional reporting by Bozorgmehr Sharafedin and Noah Browning in London and Yuka Obayashi and Mohi Narayan in Tokyo; Editing by Marguerita Choy and Jane Merriman

Our standards: The Thomson Reuters Trust Principles.

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