Global oil prices surged at the close of the week, jumping 2% in the final session, driven by growing concerns about the stability of global supplies. These strong gains come amid a complex geopolitical landscape encompassing escalating protests in Iran, intensifying tensions in the Russia-Ukraine conflict, and dramatic developments in Venezuela.
Market performance and weekly gains
In trading details, Brent crude futures rose by $1.35, or 2.18%, to settle at $63.34 a barrel. Meanwhile, West Texas Intermediate (WTI) crude futures climbed by $1.36, or 2.35%, to close at $59.12 a barrel. Both benchmarks recovered from losses incurred over the previous two days, surging by more than 3% in a single session and posting weekly gains of approximately 4% for Brent and 3% for WTI.
The geopolitical context and its impact on supplies
These price increases are particularly significant given the overall context; the oil market is extremely sensitive to any threat to major producing countries. The unrest in Iran is a worrying factor for investors, with Phil Flynn, senior analyst at a research group, noting that "the uprising in Iran is keeping the market on edge." This view is echoed by Ole Hansen of Saxo Bank, who explained that the escalating protests raise serious concerns about production disruptions in a founding member of OPEC.
On another front, the ongoing war between Russia and Ukraine is increasing uncertainty, especially with the targeting of energy infrastructure, which is putting global supply chains under constant pressure and raising the "risk premium" in the pricing of a barrel.
Developments in Venezuela and OPEC production
The effects weren't limited to the Middle East and Europe; they extended to Latin America. Recent data showed that OPEC production fell by 100,000 barrels per day last month to 28.40 million barrels, with Venezuela and Iran registering the largest declines. In a significant development, US President Donald Trump demanded full US access to Venezuela's oil sector following the arrest of President Nicolás Maduro. US officials announced Washington's intention to control Venezuelan oil sales and revenues indefinitely. This move could reshape the map of oil flows in the Western Hemisphere, adding another layer of complexity to near-term supply and demand forecasts.
