The price of crude oil has had the greatest weekly surge for the first time in over three months, leaving the price of Brent crude settling above 70 USD per barrel since July, with a weekly gain of 5.2%, while the price of West Texas Intermediate (WTI) closed with a price of near 66 USD per barrel.
The increase in oil price has greatly stemmed from geopolitical tensions, with Ukraine increasing drone attacks on the Russian energy infrastructure which has led to uncertainty around Russian oil exports. Consequently, the tension from the two countries cripples oil production for the OPEC+ member.
Other factors leading to higher oil prices.
The US economic data, which came out stronger than expected led to an increased demand of oil which dulled fears of near-term demand decline, supporting oil prices. This data has increased investor confidence. Moreover, the dollar weakened, making the oil prices to go up.
The current market status has pushed some countries like the US to take advantage of the of the tension to gain bullish geopolitical developments. In line with this, President Trump pushed Turkey to stop buying oil from Russia and earlier last week he reproved the North Atlantic Treaty Organization (NATO) members for buying fuel from the OPEC+ producer.
Future outlook for global oil market.
Last weeks surge in oil price is highly likely to break the tight trading band that has been there since early august, as investors face instability in the market due to rising geopolitical tensions. Predictions from the International Energy Agency (IEA), projects an oil surplus later in the year propelled by an increased output from OPEC+ and other producers, most especially the Americans.
Additionally, global oil supply is set to increase further as exports from the Kurdistan region in Iraq through a pipeline to Turkey`s Ceyhan port is set to resume on Saturday, following a halt of more than two years.
Despite the forecasts of a surplus, the current market dynamics and geopolitical tensions seem to be ramping up oil prices. Moreover, having Iran resuming production will most likely impact the market balance in the near future.
