Global oil prices rose on Monday, reversing earlier declines, as escalating Western sanctions on Russia and Iran fueled concerns about tighter crude supplies.
Brent crude futures increased by $0.60, or 0.79%, closing at $76.90 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed $0.50, or 0.68%, to settle at $74.06 per barrel.
The Federal Government of Nigeria has pegged its oil price benchmark for the 2025 budget estimates at $75 per barrel, highlighting the significance of current market trends for fiscal planning.
Market participants are factoring in potential disruptions to Iranian crude exports, particularly to China, amidst mounting sanctions. UBS analyst Giovanni Staunovo remarked, “It seems market participants have started to price in some small supply disruption risks on Iranian crude exports to China.”
Saudi Arabia has also responded to shifting market dynamics, raising February oil prices for Asia—a move not seen in the past three months—indicating increased demand for Middle Eastern oil.
Adding to the complexities, China’s Shandong Port Group issued a notice on Monday banning United States-sanctioned oil vessels from its network of ports, including key terminals like Qingdao, Rizhao, and Yantai. These ports play a major role in importing blacklisted oil, potentially disrupting global oil flows.
Cold weather in the U.S. and Europe has further increased heating oil demand, though broader oil price gains remain tempered by economic data. In the Eurozone, inflation accelerated in December, casting uncertainty on the pace of interest rate cuts by the European Central Bank. Panmure Liberum analyst Ashley Kelty noted, “Higher inflation in Germany raised suggestions that the ECB may not be able to cut rates as fast as hoped across the eurozone.”
Technical indicators show oil futures entering overbought territory, prompting sellers to capitalize on the recent gains. Market participants are now awaiting additional data, including the U.S. December non-farm payrolls report on Friday, for insights into U.S. interest rate policy and the outlook for oil demand.
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