Oil prices continued their upward trajectory on Friday, poised for a second consecutive weekly gain, buoyed by escalating geopolitical tensions in Europe and the Middle East, concerns surrounding tightening supply, and optimism regarding global fuel demand growth amidst improving economies.
Brent crude climbed by 40 cents, or 0.4%, reaching $91.05 a barrel by 0425 GMT, while U.S. West Texas Intermediate crude rose to $86.82 a barrel, up by 23 cents, or 0.3%. Both benchmarks settled at their highest levels since October on Thursday.
Analysts from ANZ, Daniel Hynes, and Soni Kumari, expressed optimism about further upside potential in oil prices in the short term. They highlighted a more positive economic backdrop, ongoing supply constraints, and rising geopolitical risks as key drivers behind this trend. The bank raised its 3-month price target for Brent crude to $95 a barrel.
Brent and WTI are poised to record gains of more than 4% this week, marking a second consecutive weekly increase. These gains were propelled by geopolitical tensions, particularly after Iran, the third-largest OPEC producer, vowed revenge against Israel for an attack that resulted in the death of high-ranking Iranian military personnel. It’s worth noting that Israel has not claimed responsibility for the attack on Iran’s embassy compound in Syria, which occurred on Monday.
Furthermore, ongoing Ukrainian drone attacks targeting refineries in Russia have reportedly disrupted more than 15% of Russian capacity, according to a NATO official’s statement on Thursday. This development has significantly impacted Russia’s fuel output.
As geopolitical tensions continue to escalate and supply disruptions persist, oil market dynamics remain fluid. Investors are closely monitoring developments and assessing their potential impact on global oil supply and demand fundamentals.
