Oil Snaps Seven-Week Losing Streak
Oil prices climbed this week, snapping a seven-week decline. The rebound was driven by U.S. equity gains and stalled Ukraine peace talks. West Texas Intermediate (WTI) rose almost 1%, closing just above $67 per barrel. Brent crude also advanced, finishing just under $71.
This minor uptick gave oil a 0.2% weekly gain, narrowly avoiding an eighth straight weekly loss. That would have been the longest losing streak since 2015 for oil markets.
Geopolitical Tensions Boost Oil Prices
Russian President Vladimir Putin recently demanded Ukrainian troops in the Kursk region surrender. Ukraine rejected the request, casting doubt over the timing of a ceasefire. As the talks faltered, oil traders reacted by bidding up prices.
Peace between Russia and Ukraine could mean a return of Russian oil supply. The current deadlock, however, keeps that possibility uncertain, maintaining upward pressure on oil prices.
US Sanctions on Iran and Russia Add to Volatility
Early in the week, oil prices rose as much as 1.4% after new U.S. sanctions were announced. The White House targeted Iran’s oil minister and several firms tied to Russian energy transport. These restrictions are expected to complicate the flow of sanctioned oil, tightening global supply.
Though prices later eased, the geopolitical impact remains significant. As traders weigh whether these sanctions will be strictly enforced, oil markets remain volatile.
Trade Wars and Inflation Worsen Oil Outlook
Oil demand expectations have weakened under the strain of U.S. trade tensions. President Donald Trump’s aggressive stance on trade has raised fears of a global economic slowdown. That would lead to reduced oil consumption over time.
Long-term inflation expectations surged last week by the most since 1993. Rising inflation tends to erode purchasing power and depress overall demand, especially for oil-intensive sectors like manufacturing and transport.
Traders Cautious Despite Oil’s Rebound
Rebecca Babin, senior energy trader at CIBC Private Wealth Group, noted that oil markets are reacting less to headlines. “The sanctions are all just words until they’re enforced,” she said. That means traders are more focused on macroeconomic indicators and real supply shifts.
There’s also speculation about a potential oversupply situation. The International Energy Agency (IEA) has forecasted a deepening oil glut, with OPEC+ expected to increase output. Combined with falling demand from the trade war, the outlook for oil remains murky.
Outlook: Oil Faces a Delicate Balance
Oil may continue to rise in the short term if peace talks collapse or sanctions tighten. But any breakthrough in Russia-Ukraine negotiations, or easing trade tensions, could quickly push prices lower. A supply glut remains a real possibility.
For now, oil markets are balancing fragile geopolitical news with broader economic fears. Investors and traders will continue watching headlines from Eastern Europe and Washington for cues.