,This satellite imagery released by Maxar Technologies shows tug boats and dredgers attempting to free the MV Ever Given on March 26, 2021, in the Suez Canal. - The container ship, which is longer than four football fields, has been wedged diagonally across the entire canal since March 23, shutting the waterway in both directions. The blockage has caused a huge traffic jam for more than 200 ships at either end of the 193-km (120-mile) long canal and major delays in the delivery of oil and other products. - AFP
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NEW YORK: Oil prices rose more than 4% on Friday on worries global supplies of crude and refined products could be disrupted for weeks as workers try to dislodge a giant container ship blocking the Suez Canal.
It was a rebound from a sharp decline the previous session on concerns that fresh coronavirus lockdowns in Europe would hurt demand.
Brent crude rose $2.62, or 4.2%, to settle at $64.57 a barrel, after dropping 3.8% on Thursday. U.S. West Texas Intermediate (WTI) crude gained $2.41, or 4.1%, to settle at $60.97 a barrel, having tumbled 4.3% a day earlier.
Brent rose 0.1% over the last week, while WTI dropped 0.7%, its third weekly loss.
Oil trade was volatile this week, as traders weighed the potential impact of the Suez Canal blockage which happened on Tuesday against the effect of new coronavirus lockdowns.
"Today the market is up again as traders in a change of heart decided that the Suez Canal blockade is actually becoming more significant for oil flows and supply deliveries than they previously concluded," said Paola Rodriguez Masiu, Rystad Energy's vice president of oil markets.
The Suez Canal stepped up efforts on Friday to free the stuck mega vessel, after an earlier attempt failed. Efforts to free it may take weeks, with possible complications from unstable weather.
Of the 39.2 million barrels per day (bpd) of total seaborne crude in 2020,1.74 million bpd went through the Suez Canal, according to data intelligence firm Kpler. Additionally, 1.54 million bpd of refined oil products flow through the canal, about 9% of global seaborne oil product trade, Kpler said.
On Friday, there were 10 vessels waiting at the entry points of the Canal carrying around 10 million barrels of oil, Kpler said.
Reeling from the blockage in the Suez Canal, shipping rates for oil product tankers have nearly doubled this week, and several vessels were diverted.
The oil markets were also lifted by worries over escalating geopolitical risk in the Middle East. Yemen's Houthi forces on Friday said they launched attacks on facilities owned by Saudi Aramco.
Prices also drew support from expectations that the Organization of the Petroleum Exporting Countries and its allies will maintain lower production.
Goldman Sachs said it expects OPEC+ to keep production unchanged for May when the group meets next week,"with a still large ramp-up of 3.4 million barrels per day expected by September."