All Eyes on OPEC as Bearish Bias Remains Firm

Crude oil markets faced significant volatility this week, shaped by shifting geopolitical landscapes, evolving supply-demand balances, and key policy speculation within OPEC+.

The combination of these factors resulted in fluctuating prices, with a bearish tilt into Tuesday’s close.

Geopolitical Developments Erode Risk Premium

This week, oil markets reacted sharply to geopolitical news, particularly the announcement of a ceasefire agreement between Israel and Lebanon, which aimed to de-escalate the conflict involving Hezbollah. The news spurred a swift drop in oil prices, removing a significant portion of the geopolitical risk premium. Market participants speculated that the ceasefire could lead the U.S. to ease sanctions on Iranian oil exports, potentially increasing global supply. Iran’s ability to return additional barrels to the market has been a persistent source of concern for traders, as the nation could contribute up to 1 million barrels per day under relaxed sanctions??.

Meanwhile, ongoing hostilities in Ukraine, including renewed strikes on Kyiv, highlighted risks to Russian oil supplies. While these risks have not yet materialized into widespread disruptions, they remain a critical factor underpinning market sentiment. Any escalation in the region could swiftly alter the supply outlook?.

Asian Demand Offers Support

On the demand side, Asia continued to provide a stabilizing force for oil prices. China, the world’s largest crude importer.