Oil heads for first weekly decline in seven weeks

London — Oil prices rose on Friday after the International Energy Agency (IEA) said oil markets were tight, but were still heading for weekly losses on inflation worries and US-Iran, which could boost global supplies.

Brent crude futures rose 39c, or 0.4%, to $91.80 a barrel at 10.15am GMT, while US West Texas Intermediate crude gained 45c, or 0.5%, to $90.33 a barrel.

Prices are on track for their first weekly decline after seven consecutive weekly gains, however.

Saudi Arabia and the United Arab Emirates could help to calm volatile oil markets if they pumped more crude, the IEA said on Friday, adding that the Opec+ alliance produced 900,000 barrels per day (bpd) below target in January.

The two Opec+ producers have the most spare production capacity and could help to relieve dwindling global oil inventories that have been among factors pushing prices towards $100 a barrel, deepening inflation worldwide.

This comes after Opec said that world oil demand might rise even more steeply in 2022 amid a strong post-pandemic economic recovery.

The prospect of an aggressive US Federal Reserve interest-rate hike and ongoing talks between the US and Iran on the latter's nuclear programme capped further gains in prices, however.

“Yesterday's inflation number likely puts more pressure on the US Fed to act more aggressively with rate hikes. This expectation is weighing on oil and the broader commodities complex somewhat,” said Warren Patterson, ING’s head of commodities research.

St Louis Federal Reserve Bank president James Bullard had said he wanted a full percentage point of interest rate hikes by July 1, following the release of US inflation data that saw its biggest annual increase in 40 years.

Indirect talks between the US and Iran to revive a nuclear deal, resumed this week after a 10-day break. A deal could see the lifting of sanctions on Iranian oil and ease global supply tightness. 

Reuters