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Oil prices bounced back on Friday, recovering some of the previous session’s losses, as the Ukraine conflict remains unresolved, limiting the prospect of increased Russian energy supplies.
Key Oil Price Movements:
- Brent Crude Futures: $70.52/barrel, up 0.9% (+64 cents).
- West Texas Intermediate (WTI): $67.26/barrel, up 1.1% (+71 cents).
Market Drivers:
1. Ukraine Conflict Limits Russian Energy Supply
- Russian President Vladimir Putin acknowledged a U.S.-backed ceasefire proposal but demanded conditions that make a quick resolution unlikely.
- U.S. pressure on Russia:
- The Trump administration allowed a key energy transaction license with Russian financial institutions to expire, tightening restrictions on Russian oil.
- Chinese state firms are reducing Russian oil purchases over sanctions risks.
2. Global Trade War & Recession Fears
- President Donald Trump threatened a 200% tariff on European wine, cognac, and alcohol, escalating trade tensions.
- Trade war uncertainty has roiled financial markets and raised recession fears, dampening oil demand expectations.
3. Oil Demand-Supply Imbalance
- IEA Warning:
- Global oil supply may exceed demand by 600,000 barrels/day in 2024, driven by U.S. production growth and slower demand expansion.
- This has weighed on oil prices, despite supply risks from Russia and Iran.
4. U.S.-Iran Tensions Escalate
- U.S. imposes fresh sanctions on Iran, including on Iranian Oil Minister Mohsen Paknejad.
- China & Russia defend Iran, calling for sanctions removal before resuming nuclear negotiations.
Outlook:
Oil prices remain volatile, with geopolitical risks supporting prices while demand concerns and trade war fears act as a drag. If global recession fears intensify, oil could struggle to sustain gains, but further supply disruptions from Russia or Iran may keep prices above key support levels.
