Oil Prices Edge Higher WoW on Geopolitical Tensions
Oil prices rose slightly week on week (WoW) due to heightened geopolitical tensions, changing trade signals from the US, and increased demand indicators from China that bolstered market sentiment. However, plentiful global supply and worries surrounding US monetary policy capped the increases.
International benchmark Brent crude traded at $64.41 per barrel, up 1.3% from last Friday’s close of $63.55. US benchmark West Texas Intermediate (WTI) rose 1.8% to $60.31 per barrel, compared with $59.22 a week earlier.
Prices fell early in the week after reports that US President Donald Trump had halted plans for a potential military strike on Iran, easing fears of supply disruptions in the Middle East.
With US markets closed Monday for the Martin Luther King Jr. Day holiday, trading volumes were thin. Investors also monitored developments related to Venezuela after Washington signaled it would move to take control of the country’s oil sector.
US Energy Secretary Chris Wright said the administration is moving quickly to grant Chevron an expanded license to produce oil in Venezuela, according to reports.
Prices were little changed on Tuesday as stronger-than-expected economic data from China supported demand sentiment, while gains were capped by renewed trade and geopolitical concerns linked to Trump’s tariff threats against Europe.
China’s economy grew 5% in 2025, meeting the government’s annual growth target despite weak domestic demand, deflationary pressures and a prolonged property sector downturn.
Data from the National Bureau of Statistics showed gross domestic product exceeded 140 trillion yuan ($20 trillion) for the first time. December retail sales rose 0.9% year-on-year, while industrial output increased 5.2%, beating forecasts. Energy indicators also remained strong, with refinery throughput and crude output reaching record highs in 2025.
Midweek, prices firmed as sharp trade rhetoric and geopolitical uncertainty weighed on risk appetite. Trump said tariffs of 10% would be imposed from Feb. 1 on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland, rising to 25% in June unless a deal is reached over Greenland.
He later threatened 200% tariffs on French wine and champagne following comments by French President Emmanuel Macron. The escalating rhetoric revived concerns over global energy supply security and prompted some buying.
Attention also turned to the World Economic Forum in Davos, where Trump’s remarks on trade and Greenland were closely watched. Heightened risk aversion lifted safe-haven demand, pushing gold to record highs, while US Treasury bonds sold off and the dollar weakened, typically supportive for dollar-denominated commodities such as oil.
Markets also digested signals on US monetary policy. Trump said he was close to naming a successor to Federal Reserve Chair Jerome Powell, fueling expectations of a more growth- and low-rate-friendly Fed. Those expectations weighed on the dollar and offered some support to oil prices, though concerns over central bank independence limited upside.
On Thursday, prices edged lower after Trump said a framework for a deal involving Greenland and the broader Arctic had been established following talks with NATO Secretary General Mark Rutte, and that planned tariffs for Feb. 1 would not take effect.
While easing trade tensions helped stabilize prices, lingering Arctic-related geopolitical risks capped gains. On the fundamentals side, the International Energy Agency slightly raised its global oil demand growth forecast, projecting demand to rise by about 932,000 barrels per day (bpd) in 2026 to 104.98 million bpd.
Global supply fell by 350,000 bpd in December to 107.41 million bpd, marking the third consecutive monthly decline and remaining about 1.6 million bpd below the September 2025 record. Analysts, however, note that supply continues to exceed demand, limiting near-term upside.
Prices rose again on Friday after Trump signaled the possibility of military action against Iran, citing a “big force” moving toward the country. The remarks renewed fears of disruptions in the Middle East, which accounts for roughly one-third of global oil production and includes critical shipping routes such as the Strait of Hormuz.
Gains were capped by US inventory data pointing to softer demand. According to the Energy Information Administration, commercial crude stocks rose by about 3.6 million barrels to 426 million barrels in the week ended Jan. 16, below market expectations.
Gasoline inventories increased by around 6 million barrels to 257 million barrels, while the strategic petroleum reserve rose by 800,000 barrels to 414.5 million barrels. XRP Attempts Fresh Breakout at Oversold Technical Zone
