Oil Prices Surge 2% to Four-Month High Amid Supply Concerns and Stronger Demand Signals

Oil prices climbed about 2% to a four-month high on Monday on lower crude exports from Iraq and Saudi Arabia and signs of stronger demand and economic growth in China and the U.S.

Brent futures rose $1.45, or 1.7%, to $86.79 a barrel by 1:50 p.m. EDT (1750 GMT), while U.S. West Texas Intermediate (WTI) crude rose $1.54, or 1.9%, to $82.58.

That pushed both benchmarks into technically overbought territory with Brent on track for its highest close since Nov. 2 and WTI on track for its highest close since Oct. 27.

In other energy markets, U.S. gasoline futures were on track to close at their highest price since August 2023.

On the supply side, Iraq, OPEC’s second-largest producer, said it would reduce crude exports to 3.3 million barrels a day (bpd) in the coming months to compensate for exceeding its OPEC+ quota since January, a pledge that would cut shipments by 130,000 bpd from last month.

In January and February, Iraq pumped significantly more oil than an output target established in January when several members of the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, a group known as OPEC+, agreed to support the market.

In Saudi Arabia, OPEC’s largest producer, crude exports fell for a second straight month, down to 6.297 million bpd in January from 6.308 million bpd in December.

In Russia, meanwhile, Ukrainian attacks on energy infrastructure have idled around 7% of refining capacity in the first quarter, according to a Reuters analysis.

Market participants said refinery outages will push Russia to increase oil exports through its western ports in March by almost 200,000 bpd to around 2.15 million bpd.

In the U.S., meanwhile, oil output from top shale-producing regions will rise in April to the highest level in four months, according to a federal energy outlook.