By Florence Tan
Oil prices continued to climb on Friday, with futures up more than 4% for the week, as tensions in Ukraine escalated following Russian President Vladimir Putin’s ominous warning of a potential global conflict.
Brent crude futures rose by 0.1% to $74.33 a barrel, while U.S. West Texas Intermediate crude futures increased by 0.2% to $70.23 per barrel.
Both contracts experienced a 2% spike on Thursday, marking their strongest weekly performance since late September. The surge comes as Russia intensifies its attacks on Ukraine, prompting concerns of potential oil supply disruptions from one of the world’s largest producers.
Putin’s announcement of a ballistic missile strike on Ukraine has heightened fears of a broader conflict, further impacting global oil markets. Russia, a key oil producer, has been facing output declines amid sanctions and supply restrictions from OPEC+.
Despite the bullish trend, growing crude and gasoline inventories, as well as projections of surplus supply in the coming year, have tempered price gains. Analysts from Goldman Sachs anticipate Brent crude to remain within a $70-85 range, citing high spare capacity and price elasticity of OPEC and shale supply.
However, the potential for prices to break out remains a concern, with the possibility of Brent hitting $85 a barrel in the first half of 2025 if Iranian supply diminishes due to stricter sanctions enforcement under the new U.S. administration.
Market experts anticipate a rise in U.S. oil inventories in the upcoming week, driven by increased production and refinery activity. Jim Ritterbusch of Ritterbusch and Associates warns of negative implications for crude and key products.
Meanwhile, China, the world’s largest crude importer, announced measures to boost trade, including support for energy product imports, amid uncertainties surrounding potential tariffs imposed by the U.S.
Overall, the geopolitical tensions in Ukraine and the ongoing supply-demand dynamics in the oil market are likely to continue influencing prices in the near term. Investors should remain vigilant and monitor developments closely to make informed decisions regarding their financial portfolios.