Crude oil prices edged up on Tuesday, extending sharp gains from the previous session on supply disruption risks from Iraqi Kurdistan and hopes that banking sector turmoil is contained.
Brent crude futures settled at $78.65 a barrel, up 53 cents, or 0.7%. West Texas Intermediate U.S. crude settled at $73.20 a barrel, gaining 39 cents, or 0.5%.
On Monday, prices rallied more than $3 after Iraq was forced to halt exports of about 450,000 barrels per day (bpd) from its northern Kurdistan region through Turkey after an arbitration decision confirmed Baghdad’s consent was needed to ship the oil.
“The loss of this northern Iraq oil is a problem for the market, and I think it’s being underestimated,” said John Kilduff, a partner at Again Capital in New York.
Barclays said any protracted outage of Kurdish exports until the end of the year would imply a $3 a barrel upside to the bank’s $92 a barrel Brent price forecast for 2023.
Monday’s announcement that First Citizens BancShares Inc will acquire deposits and loans of failed Silicon Valley Bank fed hopes for the sector and sent European bank shares higher.
“Concerns over banking issues have subsided for now in temporarily relieving expectations for a recession,” said Jim Ritterbusch of consultancy Ritterbusch and Associates.
A weaker U.S. dollar, which makes oil less expensive for international buyers, also lifted crude prices, Ritterbusch added.
Oil prices were expected to draw continued support from signs of recovering demand in China.
China’s crude oil imports are expected to rise by 6.2% in 2023 to 540 million tonnes, an annual forecast by a research unit of China National Petroleum Corp showed on Monday.
Russian Deputy Prime Minister Alexander Novak on Tuesday said Russia needed to focus on boosting energy exports to so-called friendly countries and noted that Russian oil supply to India registered a 22-fold jump last year.
U.S. crude oil stockpiles were seen rising by about 200,000 barrels last week, a preliminary Reuters poll showed on Monday, but analysts said products like gasoline could fall.
The American Petroleum Institute (API) will publish its inventory data at 4:30 p.m. EDT (2030 GMT) on Tuesday and the U.S. Energy Information Administration at 10:30 a.m. (1430 GMT) on Wednesday.
Limiting oil prices were French industrial strikes that resulted in the country’s refineries being debilitated to some extent, hindering fuel deliveries throughout the country and depressing European crude prices as market players look to sell.