Oil prices continued their upward trajectory on Friday, setting the stage for a fourth consecutive week of gains. The catalyst for this surge is the latest round of US sanctions targeting Russian energy trade, which has created significant supply disruptions, impacting both spot prices and shipping rates.
Brent crude futures experienced a modest increase of 0.3%, reaching $81.55 per barrel, while US West Texas Intermediate (WTI) crude showed a stronger gain of 0.7%, reaching $79.22. Although both benchmarks saw a slight dip on Thursday due to anticipated de-escalation of Houthi attacks on Red Sea shipping, the overall weekly trend remains firmly bullish. Year-to-date, Brent has climbed by an impressive 9%, and WTI has risen by 10%.
“The current strength in the crude market is fueled by a confluence of factors,” explains Toshitaka Tazawa, an analyst at Fujitomi Securities, according to Reuters. “Supply concerns stemming from US sanctions on Russian oil producers and tankers are being compounded by expectations of a demand recovery, potentially spurred by US interest rate cuts.” Tazawa also highlighted the anticipated surge in kerosene demand due to cold weather in the US as another contributing factor to rising prices.
Beyond the immediate impact of sanctions, market participants are keenly observing the potential for further supply disruptions in the coming week. The return of Donald Trump to the White House next Monday introduces a new layer of uncertainty to the global energy landscape.
“The resurgence of supply risks continues to underpin oil prices,” analysts at ING noted in a recent research report. They emphasized the likelihood of a hardline stance from the second Trump administration towards Iran and Venezuela, both significant players in the global crude oil supply chain. This potential for renewed geopolitical tensions adds another layer of complexity to the already volatile oil market. The combined pressures of sanctions, demand expectations, and geopolitical uncertainty suggest that the upward momentum in oil prices may persist in the near term.
