Oil Prices Set for Weekly Loss as Demand Concerns Offset Geopolitics

Crude oil prices were set for a weekly loss today despite a flare-up in the Middle East and the virtual certainty OPEC+ would not be bringing any barrels back anytime soon.

Brent crude was trading at $73.38 per barrel at the time of writing, and West Texas Intermediate was changing hands for $69.15, both up from Thursday but down on the start of the week as the U.S. brokered a ceasefire between Israel and Lebanon’s Hezbollah. The ceasefire is already fraying at the edges, with Israel bombing Lebanese targets hours after its announcements and a day later the two were trading accusations of ceasefire violations.

Russia, meanwhile, pounded Ukrainian energy infrastructure again, boosting expectations of Western retaliation that could affect Russia’s oil industry, at least according to analysts from ANZ, as cited by Reuters.

OPEC+, meanwhile, is keeping both energy analysts and oil traders guessing as it delayed its meeting, originally planned for Sunday, until next Friday. The reason given for the delay was a scheduling conflict. The group was almost unanimously expected to announce yet another delay to its planned easing of the production cuts in light of recent price movements.

Meanwhile, the generally bearish sentiment on crude oil markets got a little shaken by predictions that once he takes office, Donald Trump would tighten the noose around Iran’s neck and possibly Russia’s, which would result in supply disruptions. On the other hand, the IEA continues to predict a sizable glut for next year and this is countering any possible swing into bullishness until a disruption actually materializes.

“The crude oil market continues to face uncertainties” in terms of demand outlook and geopolitical events, Charu Chanana, chief investment strategist for Singapore-based Saxo Markets, told Bloomberg. “These, together with market oversupply, raise doubts over OPEC+ unwinding its voluntary production cuts.”