Oil Prices Steady as Weekly Gains Build Amid Fed Expectations and Rising Geopolitical Tensions

BY COMFORT OGBONNA

WTI oil prices were on track for a weekly gain on Friday, supported by growing expectations of an upcoming Federal Reserve interest rate cut, escalating tensions between the United States and Venezuela, and stalled peace negotiations in Moscow. Despite these undercurrents of support, both major oil benchmarks slipped slightly from the previous day’s close.

Brent crude edged down by 14 cents, or 0.2%, to $63.12 per barrel by 0400 GMT. Even with the small dip, the benchmark remained largely steady for the week. U.S. West Texas Intermediate (WTI) declined by 18 cents, or 0.3%, to $59.49 per barrel, though it still posted a weekly gain of around 1.6%, marking its second consecutive week of increases.

Analysts noted that the market is currently balancing several significant factors. According to Anh Pham, a senior research specialist at LSEG, traders are weighing the impact of reduced CPC exports against improving demand outlooks supported by the possibility of a Federal Reserve rate cut. Kazakhstan’s oil shipments have fallen following a Ukrainian drone attack on the Caspian Pipeline Consortium’s Black Sea loading facility, tightening supply and adding upward pressure on prices.

Both benchmarks had settled nearly 1% higher in the previous session, reflecting renewed buying interest. A large majority of economists surveyed earlier this month expect the Federal Reserve to implement a 25-basis-point rate cut at its upcoming policy meeting. Such a move would likely stimulate economic activity and bolster energy demand, offering further support to oil markets.

Looking ahead, analysts believe supply dynamics will remain a key driver. Pham noted that a potential peace agreement with Russia could increase global oil supply and weigh on prices, while any escalation in geopolitical tensions would likely drive prices higher. OPEC+ has committed to keeping production levels unchanged through early next year, contributing steady support to the market.

Markets are also reacting to rising concerns over a potential U.S. military operation in Venezuela. President Donald Trump recently indicated that the U.S. could soon take action to curb drug trafficking activities, prompting fears of disruptions to Venezuela’s oil industry. Analysts at Rystad Energy warned that such an intervention could jeopardize the nation’s 1.1 million barrels per day of crude production, most of which is shipped to China.

Further boosting prices this week was the failure of U.S. negotiators in Moscow to secure meaningful progress toward resolving the conflict in Ukraine. A breakthrough agreement might have opened the door for Russian oil to return to global markets, but the lack of progress helped keep supply concerns elevated.

Even so, the market remains alert to signs of oversupply. Saudi Arabia recently lowered its January Arab Light crude selling price for Asian buyers to the lowest level in five years, a move reflecting increased competition and abundant supply. Despite this, the complex web of geopolitical tensions and shifting economic expectations has continued to lend support to global oil prices as the week draws to a close.