Oil Prices Gain for Fourth Consecutive Week
Oil secured its fourth straight weekly increase, the longest streak since July, as global supply risks intensified. West Texas Intermediate (WTI) crude rose nearly 2% for the week, closing below $78 a barrel on Friday. Factors like US sanctions and tightening market conditions contributed to the surge, compounded by seasonal cold weather driving up demand.
Sanctions on Russian Oil Disrupt Markets
US-imposed sanctions on Russian oil caused significant ripples in the global market. These measures, described as the Biden administration’s harshest yet, drove freight costs higher and forced traditional buyers like China and India to seek alternative suppliers.
“The Russian sanctions on 183 oil tankers have been the primary driver of recent crude price movements,” said Dennis Kissler, Senior Vice President of Trading at BOK Financial Securities.
Trump Administration’s Oil Strategy Looms
The upcoming inauguration of President-elect Donald Trump is also influencing oil market dynamics. Trump’s administration may modify current sanctions to foster a Russia-Ukraine accord, while Treasury Secretary nominee Scott Bessent has expressed support for stricter measures against Russia’s oil industry.
Adding to the uncertainty, Trump has proposed tariffs on Canadian oil imports. Canadian leaders are pushing back, with Alberta, the largest oil-producing province, resisting potential countermeasures like curtailing crude exports.
China’s Economic Signals Add to Oil Market Volatility
China, the largest global oil importer, delivered mixed economic data, further complicating the market outlook. The country met its growth target last year, driven by stimulus and export activity. However, China’s refining volumes dipped 1.6% as the shift to electric vehicles gained momentum.
Weather and Stockpile Declines Boost Oil
Cold weather across the Northern Hemisphere has significantly increased demand for heating fuel, pushing oil prices higher. US crude stockpiles have fallen to seasonal lows, adding to supply tightness.
Crude prices have rallied nearly 9% this year as these combined factors reshape market conditions.
Outlook for Oil Prices
As markets anticipate potential shifts under the Trump administration, analysts expect continued volatility. Sanctions, tariffs, and global demand will likely keep oil prices under pressure in the near term, but supply risks and seasonal demand may sustain upward momentum.