Why did oil prices reach the highest level in 3 weeks? What are the crude forecasts?
High oil prices
Crude oil prices continued their gains with Brent crude futures rising 0.35% to $77.32 per barrel while West Texas Intermediate futures rose 0.50% to $74.61 per barrel, both hitting their highest levels since October 14.
The price rise follows a nearly 1% rise in both benchmarks on Tuesday, underscoring how concerns about supply disruptions and higher winter energy demand have overshadowed broader economic uncertainty.
Crude prices are heading for gains for the third week in a row after reaching their lowest levels in three years in early December.
Possible interruptions in oil supplies
Growing concerns about tight supplies have supported crude oil futures prices recently.
The Biden administration plans to impose more sanctions on Russian oil exports before the inauguration of Donald Trump on January 20.
The outgoing US administration intends to target tankers carrying Russian crude oil products whose price exceeds $60 per barrel, which is the price imposed by the United States and its European allies on Russia.
Oil and Trump’s next steps
Meanwhile, Donald Trump is expected to strengthen restrictions on Iranian oil exports upon taking office, potentially disrupting supplies of up to 1 million barrels per day – roughly 1% of global supplies.
The echo of the American threat hits China
According to the American threats, this resonated with China, where three well-informed trade sources in the oil market told Reuters that the Chinese Shandong Ports Group issued a notice on Monday banning oil ships subject to US sanctions, despite the important alliances with Russia.
Shandong Port, which is a major oil import center on China’s east coast, operates three main terminals.
This ban is expected to exacerbate restrictions on Iranian oil supplies.
Russia’s oil production
In addition, the American Bloomberg Network reported that Russia’s crude production in December fell below the OPEC Plus target, as the country produced 8.971 million barrels per day of crude in the last month of 2024, about 7,000 barrels per day less than its agreed-upon quota.
OPEC Plus alliance moves
OPEC+ postponed its plan to reduce joint production cuts amid a slowdown in global demand and a rise in US production last month.
Read also: The Kingdom and 7 countries extend voluntary adjustments to oil production by 2.2 million barrels per day
The coalition, which supplies about half of the world’s oil, decided to postpone the increase in its production for three months and the full recovery of production for a full year until the end of 2026.
Increased demand for oil
Data from the American Petroleum Institute showed that US oil inventories may have decreased for the seventh week in a row until January 5, and if this trend is confirmed by the Energy Information Administration report that will be issued later, this may indicate a rise in energy demand amid a harsh winter in the United States, Europe and Asia. .
Positive economic data recorded in the United States and Europe may have added to the upward momentum in oil prices, as job opportunities in the United States rose to the highest level since May 2023.
The Institute for Supply Management’s Purchasing Managers’ Index for the services sector also indicated that economic activity in the services sector expanded for the sixth consecutive month in December.
In the euro zone, business activities accelerated more than expected in major economies including Spain, Italy, France and Germany last month.
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Oil forecasts in 2025
Analysts believe that the rise in oil prices may continue in the first period of 2025 amid the current state of momentum, but this cannot be decided with large odds ratios over an extended period in light of the fluctuation of excessive buying signals. Technical analysts often use indicators that measure price movements relative to historical averages.
Rapid increases or decreases in prices often lead to reversals as industry stakeholders adapt to overreact.
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