Oil prices are on track for their biggest weekly gain since early October, driven by escalating hostilities between Russia and Ukraine. Brent crude surged above $74 per barrel, up nearly 5% for the week, while West Texas Intermediate (WTI) hovered near $70. The conflict has rapidly intensified, with Russia launching a ballistic missile after Ukrainian forces made expanded use of Western-supplied long-range weapons.
Since mid-October, oil prices have swung between gains and losses, impacted by various factors, including a strengthening dollar and plentiful supply. This week, Russia further rattled markets by revising its nuclear doctrine, although the country’s foreign minister sought to reassure global leaders by downplaying the threat of nuclear escalation.
Vandana Hari, founder of Vanda Insights, explained that the uncertainty surrounding the escalation of the war is contributing to market anxiety. “The escalating attacks have injected a risk premium of $3 to $4 per barrel into the oil market,” she said.
In addition to the conflict, the United States imposed sanctions on Russia’s Gazprombank, closing a key loophole that had allowed energy transactions to continue. This move heightens the risk of further disruptions to Russian gas supplies, potentially affecting several Central European nations still dependent on Russian energy.
However, the oil market’s longer-term outlook remains clouded by concerns about a supply glut in 2025. Investors are closely monitoring OPEC+ decisions regarding the revival of dormant oil production. This decision could coincide with weak demand from China, as the country continues to struggle with an economic slowdown.
Related topics:
Morgan Stanley’s Mike Wilson Turns Bullish, Sets S&P 500 Target of 6,500 for 2025
MicroStrategy Makes Record Bitcoin Purchase, Raises $1.75 Billion for Further Acquisitions
Philippine Central Bank Signals Continued Rate Cuts Despite Global Uncertainty
