Oil prices rose on Friday, recovering some of the losses sustained in the previous session, as the likelihood of a swift resolution to the Ukraine conflict diminished, reducing expectations of increased Russian energy supplies.
Brent crude futures climbed by 46 cents, or 0.7%, to $70.34 per barrel by 0406 GMT, following a 1.5% decline in the prior session. Meanwhile, U.S. West Texas Intermediate crude gained 48 cents, or 0.7%, reaching $67.03 per barrel after dropping 1.7% on Thursday.
Russian President Vladimir Putin indicated on Thursday that Moscow was, in principle, open to a U.S.-backed ceasefire proposal for Ukraine but sought further clarifications and conditions, making an immediate cessation of hostilities unlikely. This uncertainty has tempered market confidence in a near-term resolution. Analysts suggest that U.S. sanctions on Russia will remain in place unless a formal ceasefire is agreed upon, keeping Russian oil supplies constrained.
Adding to market volatility, tensions in global trade have intensified. U.S. President Donald Trump threatened on Thursday to impose a 200% tariff on European wine, cognac, and other alcoholic beverages, exacerbating fears of a prolonged trade war that has unsettled financial markets and raised concerns about a potential economic slowdown.
On the supply side, the International Energy Agency (IEA) issued a warning that global oil production could surpass demand by approximately 600,000 barrels per day this year. This oversupply is primarily driven by increasing output from the United States, coupled with weaker-than-anticipated global demand. The IEA also noted that macroeconomic conditions underpinning oil demand projections had deteriorated in the past month due to escalating trade disputes, leading to downward revisions in demand growth estimates for late 2024 and early 2025.
While trade tensions and economic uncertainties have weighed on oil prices, concerns over potential supply disruptions caused by geopolitical instability have provided some support. ANZ analysts highlighted that although short-term price forecasts had generally pointed downward, geopolitical risks remained a significant factor in influencing market dynamics.
