Amid extreme volatility, crude oil prices rallied sharply on Monday recording their biggest gains in months after a banking crisis seemed to lose steam.
At 4:42 p.m. EST, Brent crude was trading up 4.21%, for a $3.16 increase on the day, at $78.15 per barrel. West Texas Intermediate (WTI) was trading up 5.30%, for a $3.67 increase on the day, at $72.93 per barrel.
Oil stocks were riding the wave as well, with Exxon (NYSE:XOM) up nearly 2.2% at the same time, and shares of Chevron (NYSE:CVX) up over 1%. Apache Corporation (NASDAQ:APA) was up over 2.5%, and Marathon Petroleum Corp (NYSE:MPC) was up nearly 3.4%. ConocoPhillips (NYSE:COP) was up 2.15% on the day.
While some media are attributing the rally to Iraq’s move to shut off the pipeline from Iraqi Kurdistan to Turkey following an international arbitration ruling, the amount of barrels in question here should not have been enough to move the oil price needle so sharply. There has been some speculation that shutting the taps off on 400,000 bpd from the Kurdistan Region of Iraq (KRG) could balance out the market’s anticipated loss of 500,000 bpd of Russian oil pledged under an output cut that does not yet seem to have materialized.
Also driving oil price volatility is the weekend announcement by Russian President Vladimir Putin that Moscow would turn Belarus into a station for tactical nuclear weapons.
The general sentiment in the oil market now seems to be that the fears of a wider financial crisis due to bank collapses and buyouts has somewhat eased. The easing of concerns follows an announcement by First Citizens that it would acquire deposits and loans from failed Silicon Valley Bank (SVB) to stabilize markets.