Crude oil prices experienced fluctuations recently as international markets reacted to geopolitical tensions and policy changes from the U.S. administration. Following a rise in prices, the market witnessed a pullback after U.S. President Donald Trump hinted at potential sanctions against Russia if it does not engage in a cease-fire with Ukraine. This uncertainty is influencing oil traders, who are closely monitoring developments that could impact global supply and demand dynamics.

Crude Oil Price Movements

• Brent crude futures finished the day at $70.36 per barrel, marking an increase of 90 cents or 1.3%.
• U.S. West Texas Intermediate (WTI) prices closed at $67.04, up 68 cents or 1.02%.
• However, despite these gains, both benchmarks faced significant weekly declines, with Brent dropping 3.8% and WTI down 3.9%, the largest weekly drops since January and November 2021, respectively.

Geopolitical Factors Impacting Oil Prices

In early trading on Friday, Brent prices surged to $71.40, while WTI reached $68.22 after comments from Russia’s Deputy Prime Minister Alexander Novak regarding OPEC’s plans to continue increasing output. However, these gains were tempered by the looming threat of sanctions from the U.S. aimed at Russian banks and trade tariffs on Russian goods due to ongoing military actions in Ukraine.

Market Reactions to Policy Changes

• The U.S. Federal Reserve Chairman Jerome Powell mentioned that the Fed is closely monitoring the implications of new trade policies from the Trump administration, which could affect economic stability.
• Crude oil prices reacted to a rise in U.S. crude inventories and OPEC’s announcement to increase production quotas, which added downward pressure on prices.

Outlook for Crude Oil

As crude oil prices grapple with various pressures, the market is also reacting to the uncertain political landscape. The U.S. Treasury Secretary Scott Bessent indicated intentions to limit Iranian crude exports, heightening concerns over global oil supply.

• OPEC plans to increase output by 138,000 barrels per day, a strategy that analysts view as a response to both market conditions and political pressures.
• Goldman Sachs has revised its forecasts for Brent crude oil prices, anticipating potential declines to the low-to-mid $60s by late 2026, attributing this to increased supply from OPEC+ and weaker demand growth.

Conclusion

The interplay of geopolitical tensions, changing trade policies, and OPEC’s output decisions continues to create volatility in the crude oil market. With rising inventories and the potential for increased production, traders remain cautious about the future trajectory of oil prices. As these dynamics unfold, stakeholders in the energy sector are advised to stay informed and agile in their strategies.