Oil prices experienced a notable 2% increase, reaching a four-month high on Monday, driven by decreased crude exports from major producers like Iraq and Saudi Arabia. Additionally, signs of robust demand and economic growth in both China and the United States contributed to this upward momentum.

Brent futures climbed $1.55, or 1.8%, settling at $86.89 per barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.68, or 2.1%, settling at $82.72. These gains propelled both benchmarks into technically overbought territory, with Brent achieving its highest close since October 31 and WTI since October 27. Concurrently, U.S. gasoline futures also reached their highest level since August 31.

Iraq, OPEC’s second-largest producer, announced plans to reduce crude exports to 3.3 million barrels per day (bpd) in the upcoming months to offset its OPEC+ quota excess since January, resulting in a reduction of 130,000 bpd from last month’s shipments. Similarly, Saudi Arabia, OPEC’s largest producer, experienced a second consecutive monthly decline in crude exports, falling to 6.297 million bpd in January from 6.308 million bpd in December.

Moreover, attacks on energy infrastructure in Russia by Ukraine have disrupted approximately 7% of refining capacity in the first quarter, leading Russia to increase oil exports through its western ports by nearly 200,000 bpd to around 2.15 million bpd in March.

In terms of demand, China’s factory output and retail sales surpassed expectations in the January-February period, indicating a robust start to 2024. This positive trend in demand is further supported by the country’s 3% increase in crude oil throughput compared to the same period last year.

Meanwhile, in the United States, the Federal Reserve is anticipated to maintain unchanged interest rates following its two-day policy meeting, with expectations of delaying the first rate cut to June due to stronger-than-expected economic growth and persistent inflation. Lower interest rates could potentially stimulate economic expansion and bolster oil demand.

Additionally, the U.S. Energy Secretary announced that crude oil stockpiles in the Strategic Petroleum Reserve (SPR) are expected to match or exceed pre-sale levels by the end of the year, potentially driving further oil demand. Furthermore, BP’s Whiting, Indiana, refinery, with a capacity of 435,000 bpd, has resumed normal operations, positively impacting oil demand in the United States.

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