Global crude oil prices have seen significant increases recently, driven by tight predictions concerning sanctions on Russia and Iran, as well as supportive economic movements from China. Brent crude oil futures rose $1.08, or 1.5%, closing at $74.49 per barrel, marking the highest closing since November 22. Meanwhile, U.S. West Texas Intermediate (WTI) crude increased by $1.27, or 1.8%, to settle at $71.29 per barrel, also the highest closing since November 7.
The boost in prices can largely be attributed to expectations of stricter sanctions against major oil suppliers and geopolitical instability, particularly related to Western countries’ responses to the Ukraine crisis. Analysts at Ritterbusch and Associates noted, "Sự tăng giá này được thúc đẩy bởi kỳ vọng về các lệnh trừng phạt chặt chẽ hơn đối với Nga và Iran, định hướng kinh tế hỗ trợ hơn từ Trung Quốc, sự hỗn loạn chính trị ở Trung Đông và khả năng Cục Dự trữ Liên bang Mỹ (Fed) cắt giảm lãi suất vào tuần tới." This sentiment reflects the growing concerns over global oil availability amid increasing scrutiny of suppliers.
Last week, EU ambassadors agreed to impose the 15th sanction package against Russia, targeting the secret oil fleet associated with the Kremlin. The U.S. is also considering similar measures, making it apparent there is no quick fix to the geopolitical turmoil affecting the oil markets. Britain, France, and Germany have made statements to the United Nations Security Council, indicating their readiness to reimpose comprehensive international sanctions against Iran should it progress toward nuclear weapon capabilities.
On the economic front, analysts are eyeing the impact of Chinese demand, which appears to be gaining traction once again. Recent data reported China, as the largest global oil importer, has increased its crude oil imports for the first time in seven months, signaling potential resilience in demand. The International Energy Agency (IEA) has even raised its global oil demand growth forecast for 2025, now estimating it at 1.1 million barrels per day (bpd), up from the previous 990,000 bpd. The boost is largely credited to expected economic stimuli from China.
Looking at supply dynamics, OECD countries, particularly those outside OPEC+, are anticipated to ramp up oil production by approximately 1.5 million bpd next year, led by countries like Argentina, Brazil, Canada, and the U.S. OPEC+, which includes major oil-producing nations, is also planning adjustments, with the UAE aiming to cut its exports early next year. Even with the anticipated increase, market analysts are thinking about how much actual oil will flow amid rising sanctions, particularly against Iran.
The oil price fluctuations come amid discussions of monetary policy as well. Investors are speculating the U.S. Federal Reserve might implement interest rate cuts soon. Following reports of increased unemployment claims, expectations are building for possible cuts next week, with additional reductions potentially coming throughout 2024. Analysts see lower interest rates as beneficial—helping to stimulate economic growth and potentially ramping up oil demand.
Likewise, officials at the European Central Bank (ECB) seem open to the idea of lowering rates should inflation remain on track to meet targets. Four ECB policymakers recently expressed support for reduced rates if inflation stabilizes at the central bank's target of 2%, emphasizing the delicate balance between inflation control and economic growth. Keeping rates low could encourage both consumption and investment, particularly within the oil market.
Market dynamics are ever-changing. With geopolitical tensions looming, combined with fluctuations in financial policy and reactions from major oil players, the outlook for global oil prices will require careful navigation. The interaction between new sanctions, shifting economic stimuli, and production changes promises to keep the global oil market on its toes.
