Oil rises as Middle East tensions continue, demand expectations in focus

Oil prices rose on Friday as geopolitical tensions and disruptions to US oil production due to cold weather outweighed concerns about slowing demand growth in China and expectations of increased supply.

According to Reuters, by 0715 GMT, Brent crude futures rose two cents to $79.12 per barrel.

US West Texas Intermediate crude futures also rose 13 cents to $74.21.

The two benchmarks rose about two percent on Thursday, with the International Energy Agency joining the Organization of the Petroleum Exporting Countries (OPEC) in its expectations of strong growth in global oil demand, and the two crude oils are on their way to end the week higher by between 1 and 2 percent.

On Thursday, the International Energy Agency once again raised its forecast for global oil demand growth in 2024, although its numbers are still lower than OPEC’s expectations. She said the market appears well-supplied thanks to strong growth in non-OPEC countries.

The agency expects global oil supplies to rise by 1.5 million barrels per day to a new level of 103.5 million barrels per day in 2024, supported by record production from the United States, Brazil, Guyana and Canada.

Hiroyuki Kikukawa, head of Nissan Securities’ NS Trading unit, said that in addition to the tensions in the Middle East, there are also fears that the US-China conflict will gain attention again with the US elections approaching, which will have a negative impact on energy demand.

He added, “Unless tensions in the Middle East escalate more quickly, West Texas Intermediate crude oil is likely to continue trading in a range between $70 and $76.”

Data from the consulting company Vortexa indicate that tanker traffic through the Bab al-Mandab Strait in the period from January 13 to 17 decreased by 58% compared to the same period in 2023.