Oil prices rose more than 2% on Friday as strong summer demand and concerns over global politics pushed the market upward. According to the International Energy Agency (IEA), the oil market may be tighter than it appears, especially with high usage during the summer for travel and electricity.
- Brent crude went up by $1.72 (2.5%) to $70.36 per barrel.
- US West Texas Intermediate (WTI) rose by $1.88 (2.8%) to $68.45 per barrel.
Over the week, Brent oil increased by 3% and WTI rose by 2.2%.
Also Read: Crude May Dip Below $60 by Year-End, Says S&P; India’s Oil Use to Rise
Key Reasons Behind the Price Increase:
- Tight Market Conditions:
The IEA suggested that demand is strong this summer, especially with refineries working hard to meet travel and power needs. - Geopolitical Tensions:
Possible new U.S. tariffs and upcoming sanctions on Russia are adding uncertainty and driving prices higher. - Lower Oil Production in the US:
For the 11th week in a row, U.S. companies have reduced the number of oil and gas drilling rigs. This kind of long reduction hasn’t happened since July 2020 during the COVID-19 lockdowns. - Mixed Outlook from IEA:
The IEA expects oil supply to grow, but it has reduced its demand growth forecast. This could lead to too much supply in the future. - OPEC+ and Russia’s Role:
Russia has promised to fix its overproduction by September. OPEC+ could also increase oil supply quickly if needed, which might affect prices later. - High Demand from China:
Saudi Arabia is planning to send 51 million barrels of oil to China in August—the largest shipment in over two years—showing strong current demand.
Long-Term Uncertainty
- OPEC recently cut its global oil demand forecast for 2026–2029, pointing to weaker demand from China.
- U.S. President Donald Trump said he would make an important announcement about Russia soon, though he gave no details.
- The European Union is planning new sanctions on Russia, including setting a flexible price cap on Russian oil.
Despite the possible oversupply later, short-term oil prices remain strong due to current demand and geopolitical developments.
Read more: Oil Prices Drop to $70.16 as Trump’s Tariffs Raise Global Demand Fears
