Oil prices rose on Friday and are heading towards a fourth consecutive weekly gain as the latest US sanctions on Russian energy trade have disrupted supply, pushing up spot trade prices and shipping rates.
Brent crude futures rose by 44 cents, or 0.5%, to $81.73 per barrel, while US West Texas Intermediate crude futures were up 62 cents, or 0.8%, to $79.3 per barrel.
Brent and WTI have gained 2.5% and 3.6% so far this week.
“Supply concerns from US sanctions on Russian oil producers and tankers, combined with expectations of a demand recovery driven by potential US interest rate cuts, are bolstering the crude market,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
“The anticipated increase in kerosene demand due to cold weather in the US is another supportive factor,” he added.
The Biden administration last Friday announced widening sanctions targeting Russian oil producers and tankers, followed by more measures against Russia’s military-industrial base and sanctions-evasion efforts.
Investors are also anxiously waiting to see any possible more supply disruptions as Donald Trump takes office next Monday.
“Mounting supply risks continue to provide broad support to oil prices,” ING analysts wrote in a research note, adding the incoming Donald Trump administration is expected to take a tough stance on Iran and Venezuela, the two main suppliers of crude oil.
Better demand expectations also lent some support to the oil market with renewed hopes of interest rate cuts by the US Federal Reserve after data showed easing inflation in the world’s biggest economy.
Federal Reserve Governor Christopher Waller said on Thursday that inflation is likely to continue to ease and possibly allow the US central bank to cut interest rates sooner and faster than expected.
Meanwhile, China’s economic data on Friday showed higher-than-expected economic growth for the fourth quarter and the full year of 2024, as a flurry of stimulus measures came into effect.
However, China’s oil refinery throughput in 2024 fell for the first time in more than two decades, excluding the pandemic-hit year of 2022, government data showed on Friday, as plants reduced output in response to stagnant fuel demand and depressed margins.
Also weighing on the market was that Yemen’s maritime security officials said the Houthi militia is expected to announce a halt in its attacks on ships in the Red Sea, after a ceasefire deal in the war in Gaza between Israel and Hamas.
The attacks have disrupted global shipping, forcing firms to make longer and more expensive journeys around southern Africa for over a year.
