Oil prices rose more than 3% today, rebounding on concerns it could take weeks to dislodge a giant container ship blocking the Suez Canal, which would squeeze supplies of crude and refined products.
Prices, however, were still headed for a third consecutive weekly loss, with the outlook for demand dented by fresh coronavirus lockdowns in Europe.
Brent crude was up $2.12, or 3.4%, to $64.07 a barrel this afternoon, after dropping 3.8% yesterday.
US West Texas Intermediate (WTI) crude was up $2.16, or 3.7%, at $60.72 a barrel, having tumbled 4.3% a day earlier.
Both benchmarks were on track for weekly losses, following a more than 6% decline last week.
Egypt's Suez Canal Authority said today that operations to free the stranded container ship would resume after completing dredging operations, which are 87% complete.
The salvage company said yesterday that dislodging the ship could take weeks.
Of the 39.2 million barrels per day (bpd) of total seaborne crude in 2020, 1.74 million bpd went through the Suez Canal, according to data intelligence firm Kpler.
Additionally, 1.54 million bpd of refined oil products flow through the canal, about 9% of global seaborne oil product trade, Kpler said.
On Friday, there were ten vessels waiting at the entry points of the Canal carrying around 10 million barrels of oil, Kpler said.
Reeling from the blockage in the Suez Canal, shipping rates for oil product tankers have nearly doubled this week, and several vessels were diverted.
The oil markets were also lifted by worries over escalating geopolitical risk in the Middle East. Yemen's Houthi forces today said they launched attacks on facilities owned by Saudi Aramco.
Expectations that the Organization of the Petroleum Exporting Countries and its allies will likely maintain their lower production also supported prices.
Big oil importer India said Saudi Arabia telling it to tap its oil stockpiles to tackle high prices was "undiplomatic".
Acting a week ahead of the OPEC+ meeting, Abu Dhabi National Oil Company (ADNOC) has deepened crude oil supply cuts to Asian customers in June to 10%-15% from 5%-15% in May, several sources said.