Oil Prices Set for a Weekly Gain as U.S. Prepares More Sanctions

Crude oil prices were set for their first weekly gain since late November on news that the U.S. was considering additional sanctions against Russia and Iran. The potential of such a move disrupting the supply balance lent upward momentum to prices.

The latest report of fresh China stimulus measures meanwhile continued to support the benchmarks despite the lack of details about what the measures would entail specifically.

At the time of writing, Brent crude was trading at $73.67 per barrel, with West Texas Intermediate at $70.34 per barrel, after Reuters quoted Treasury Secretary Janet Yellen as saying the oil market looked well supplied and with weak demand, which could be an opportune time for Washington to try to reduce Russia’s oil revenues once again.

“Now what’s unusual about this moment is that the oil market seems to be well supplied,” Yellen said earlier in the week. “Prices are relatively low. Global demand is down, and there really has been an increase in supply.”

“So the global oil market is softer, and that creates, possibly, an opportunity to take some further action,” she said, without elaborating on the details of that further action.

Separately, traders anticipate a Trump presidency to step up the sanction pressure on Iran, which would inevitably mean sanctions on the country’s oil industry as the biggest and most obvious target for such action.

Meanwhile, the International Energy Agency has once again predicted that the oil market will be in a surplus next year, thanks to production growth in non-OPEC countries, including Guyana, Argentina, Brazil, Canada, and the United States. These, the IEA said this week, will add some 1.5 million bpd to global supply, and the 2.2-million bpd that OPEC+ is withholding will apparently not be enough to swing the market into a deficit. Interestingly, the agency revised up its demand growth projection, from 990,000 bpd to 1.1 million bpd next year.