A Closer Look at Oil
Oil prices are on track for weekly gains of more than 2%. Brent crude rose 0.4% to $81.58 per barrel, while West Texas Intermediate (WTI) crude increased by 0.5% to $79.09 per barrel at last check.
Factors Driving the Bullish Case
Despite the Israel-Hamas ceasefire, several fundamental factors continue to support higher oil prices:
- U.S. Sanctions: Concerns persist over supply disruptions caused by U.S. sanctions on Russian oil producers and tankers.
- Tightened Sanctions on Russia: Former Treasury Secretary pick Scott Bessent has indicated support for stricter sanctions on Russia, particularly targeting oil majors, as part of efforts to end the war in Ukraine.
- Tougher Stances on Iran and Venezuela: The Trump administration is expected to adopt a more aggressive policy toward Iran and Venezuela, which could impact global oil supplies.
- Middle East Tensions: While progress has been made, unresolved geopolitical tensions in the Middle East continue to pose a risk of supply disruptions, adding to market uncertainty.
- OPEC+ Production Decisions: OPEC+ has delayed production increases, further tightening supply and supporting higher prices.
Technical Outlook
On the technical front, crude oil is currently in the overbought zone on the daily chart and is forming a bearish weekly pattern. This suggests the potential for prices to pull back to the $75–$76 range in the near term.
Looking Ahead
As we move into 2025, the combination of ongoing supply constraints, shifting economic conditions, and persistent geopolitical tensions points to heightened volatility in oil prices.