Oil Prices See Slight Weekly Rise on Demand, Supply Imbalance
Oil prices increased week on week amidst uncertainties, and the US brokered peace talks between Russia and Ukraine with the OPEC gradual crude output surge. However, hopes for a ceasefire in Ukraine started fading while the US sanctioned Iran’s exports raised supply-side risks.
Brent crude traded at $70.23 per barrel on Friday, up by 0.05% from last week’s closing price of $70.19 per barrel. West Texas Intermediate (WTI), the American benchmark, traded at $66.94 per barrel at the same time on Friday, up 0.13% from last Friday’s closing price of $66.85 per barrel.
Oil prices gained upward support throughout the week as hopes for a temporary ceasefire in Ukraine faded and concerns over global oil supply intensified.
Russian President Vladimir Putin told reporters that any agreement on a US-backed 30-day ceasefire proposal must contribute to long-term peace and address the root causes of the crisis. Ukrainian President Volodymyr Zelenskyy responded on X, suggesting that Putin was preparing to reject the US ceasefire proposal.
The dimming prospects of a near-term peace deal dampened expectations of increased Russian energy supply, fuelling oil price gains. Adding to supply concerns, the US Treasury Department announced that Iranian Petroleum Minister Mohsen Paknejad was added to the sanctions list In a statement on Thursday.
Several companies operating in China, India, and other nations that own or operate vessels transporting Iranian oil were also sanctioned. The measures target Iran’s so-called ‘shadow fleet’ used to export oil to China, reaffirming Washington’s goal of reducing Iranian oil exports to zero.
Meanwhile, on Friday, weak inflation data from China, the world’s biggest crude importer, and uncertainty over US tariff policies pressured oil prices. China’s latest inflation figures indicated sluggish domestic demand, with the Consumer Price Index (CPI) dropping by 0.7% year-on-year in February and the Producer Price Index (PPI) declining by 2.2%.
Analysts warned that continued weak demand in China could dampen its appetite for oil in the near term. Compounding concerns, the US continued its ‘maximum pressure’ policy against Iran. US National Security Advisor Michael Waltz informed Iraqi Prime Minister Mohammed Shia’ al-Sudani that Washington would end a crucial sanctions waiver allowing Iraq to purchase gas and electricity from Iran.
Earlier in the week, oil prices came under pressure due to uncertainty surrounding Fed rate plans and renewed recession concerns. Uncertainty surrounding US trade tariffs and tentative ceasefire talks on Wednesday further dampened market sentiment. Analysts pointed to a cautious economic outlook, revised Fed policy expectations, and stabilised supply conditions as key drivers of midweek price declines.
Initially, expectations of a potential 25 basis point rate cut in June had boosted sentiment, with lower interest rates anticipated to weaken the US dollar and support oil demand. However, concerns grew that the Fed may hold steady—or even tighten policy—to counter inflation, strengthening the dollar and reducing oil’s appeal to investors. Naira Extends Rally on Declining Foreign Reserves
