Pakistan consumers may face the brunt as oil prices up over 4pc in a week
Business
US economy added 303,000 jobs last month, which may delay Federal Reserve interest rate cuts
- As a result of a weakened rupee, this increase is likely to be transferred to the people in Pakistan through fuel price hikes
HOUSTON (Reuters) – The Brent and US West Texas Intermediate (WTI) crude oil benchmarks rose more than $1 a barrel during trade on Friday as markets watched for signs of any direct conflict between Israel and Iran that could further tighten supplies.
Brent crude settled at $91.17 a barrel, up 52 cents, or 0.57 per cent. US WTI crude finished at $86.91 a barrel, up 32 cents, or 0.37pc.
Both benchmarks settled on Thursday at their highest levels since October.
The latest surge comes as Pakistan jacked up fuel prices under quarterly review last week. With a weakened rupee thanks to years-long sustained currency devaluation, any further increase in oil prices will also be transferred to the consumers who are already crushed by a persistent inflation.
At the same time, rising fuel prices will sustain inflation and may also reverse the gains made during the last three months which were reflected in the March consumer price index (CPI), thus killing the hopes of interest rate cuts, which were renewed by a declining inflation and had also boosted the Pakistan Stock Exchange.
Brent and WTI notched more than 4pc gains this week after Iran, the third-largest OPEC producer, vowed revenge against Israel for an attack that killed high-ranking Iranian military personnel.
"If Iran directly attacks Israel, that's never happened before," said Phil Flynn, an analyst at Price Futures Group. "It's just another geopolitical risk domino about to fall."
Israel has not claimed responsibility for the attack on Iran's embassy compound in Syria on Monday.
Ongoing Ukrainian drone attacks on refineries in Russia may have disrupted more than 15pc of Russian capacity, a NATO official said on Thursday, hitting the country's fuel output.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, this week kept its oil supply policy unchanged and pressed some countries to increase compliance with output cuts.
"Further clampdowns on adherence to quotas should see output fall further in Q2," ANZ analysts Daniel Hynes and Soni Kumari wrote in a note.
"The prospect of a tighter market should see a drawdown in inventories during the second quarter."
Meanwhile, US job growth soared in March, easily beating expectations, according to official data released on Friday which also showed a steady increase in wages.
The gain of 303,000 jobs last month points to likely robust oil demand but potentially delays anticipated interest rate cuts by the US Federal Reserve later this year.
Global oil demand is expected to grow by 1.4 million barrels per day (bpd) in the first quarter, JPMorgan analysts wrote in a note.
US energy firms this week cut the number of oil and natural gas rigs operating for a third week in a row for the first time since October, energy services firm Baker Hughes said in its closely followed report on Friday.
The oil and gas rig count, an early indicator of future output, fell by one to 620 in the week to April 5, the lowest since early February.
