Key information
- Brent crude oil futures closed at $80.79 per barrel after a notable 2.6 percent increase in the previous session.
- U.S. West Texas Intermediate crude futures fell 0.59 percent to settle at $77.39 a barrel, despite a sharp 3.3 percent rise on Wednesday.
- Oil price gains are tempered by an ongoing ceasefire agreement between Israel and Hamas and global oil demand saw growth in early 2025, slightly lower than projections.
Oil prices fell slightly on Thursday, after a surge due to worsening geopolitical tensions and a larger-than-expected drop in crude stocks in the United States. Brent crude oil futures closed at $80.79 per barrel after a notable 2.6 percent increase in the previous session, hitting its highest point since July 26. Similarly, U.S. West Texas Intermediate crude futures fell 0.59 percent, settling at $77.39 a barrel, despite a sharp 3.3 percent rise on Wednesday that propelled it at its highest level since July 19.
Geopolitical tensions
Recent price fluctuations are largely attributed to President Biden’s imposition of new sanctions targeting Russia’s military-industrial complex and evasion tactics. The measures follow earlier sanctions imposed on Russian oil producers and tankers, forcing Moscow’s main customers to seek alternative sources of supply while having a significant impact on shipping costs. Market analysts anticipate a wait-and-see approach as the incoming US administration of President Trump takes office, with uncertainty surrounding their stance on these sanctions.
OPEC dynamics
The risk of increased friction between the United States and OPEC is also on the horizon. During his previous term, President Trump pressured the producer group to cut production whenever the price of Brent crude approached $80 a barrel. Despite the recent rise in prices, OPEC+, which includes OPEC members and their allies who have committed to reducing production over the past two years, will likely exercise caution before adjusting its production strategy . Analysts suggest OPEC+ will prioritize caution after numerous instances of disappointed optimism over the past year.
Factors influencing prices
Further supporting oil prices, U.S. crude oil inventories saw a significant decline last week, reaching their lowest point since April 2022. The decline, far exceeding analysts’ expectations, reflects rising exports and falling imports, which contributes to a tighter global supply outlook.
-However, oil prices are tempered by an ongoing ceasefire agreement between Israel and Hamas, which aims to end fighting in Gaza and facilitate prisoner exchanges. Additionally, while global oil demand grew in early 2025, it was slightly lower than expected. Analysts anticipate a recovery in demand driven by travel activities linked to festivals in India and Lunar New Year celebrations in China. Additionally, speculation around a possible interest rate cut by the US Federal Reserve in 2025, fueled by a decline in US core inflation, could further support economic activity and consumer spending. ‘energy.
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