Oil Set for Longest Weekly Decline Since 2015
Oil is on track for its eighth consecutive weekly decline. This marks the longest losing streak for oil prices since 2015. West Texas Intermediate (WTI) climbed above $66 per barrel, while Brent approached $70. However, both benchmarks remain pressured by concerns over global demand.
The weakness is driven by US President Donald Trump’s intensifying trade war. Crude markets have been rattled since mid-January, with oil reacting to growing fears of slowed economic growth and reduced consumption.
Trade War Pressures Oil Demand Outlook
Trump’s latest tariff threats against major US trading partners are sending shockwaves across commodity markets. Oil is particularly vulnerable, as slower economic growth means weaker fuel consumption.
The market is reacting not only to tariffs, but also to uncertainty over monetary policy. A weaker US dollar and a modest rebound in equities offered oil prices some support this week, though not enough to reverse the broader downtrend.
Potential Ceasefire May Bring Russian Oil Back
In a Truth Social post, Trump said there’s a “good chance” the war between Russia and Ukraine will end soon. That comment sparked speculation about a return of Russian oil to global markets, adding downward pressure to oil prices already weakened by demand concerns.
Ceasefire talks are progressing. If successful, the reintroduction of Russian barrels could push global oil supply into oversupply territory. This would exacerbate the already fragile balance in the oil market.
Sanctions Impact Waning in Market Reactions
The Biden administration’s final sanctions against Russia earlier this year severely disrupted Moscow’s oil exports. A shipment of 2 million barrels to China, which would typically take under a week, took almost two months.
Still, the market seems to be shrugging off such news. According to Rebecca Babin, senior energy trader at CIBC Private Wealth, sanctions are losing their impact unless they are actively enforced. Traders are focusing more on macroeconomic risks and ceasefire developments.
Iran Sanctions Give Temporary Oil Price Support
The White House also imposed sanctions on Iran’s oil minister and restricted payment systems for Russian energy firms. These moves pushed oil prices up by as much as 1.4% earlier in the day, though gains later faded.
While sanctions sometimes give short-term lift to oil, they’re being outweighed by bearish supply and demand fundamentals.
IEA Forecasts Mounting Global Oil Surplus
The International Energy Agency (IEA) projects a growing global oil surplus this year. Trump’s tariffs, combined with the revival of OPEC+ output, are adding to the oversupply.
Market sentiment reflects skepticism that consumption will rebound fast enough to offset increased production from both OPEC+ members and a possibly resurgent Russia. If demand doesn’t recover, oil may remain under pressure well into the second half of 2025.