Oil Market on the Rise: US Sanctions Stir Waves Again

The oil market is once again in motion after recently experiencing the sharpest decline in over a month. This is due to the ongoing impacts of U.S. sanctions against Russian oil flows, which are having global repercussions. A recent industry document also indicates decreased U.S. oil inventories. West Texas Intermediate (WTI) climbed toward the $78 per barrel mark after falling 1.7% on Tuesday following rumors of a peace deal between Israel and Hamas, while the Brent price closed below $80. According to the American Petroleum Institute, crude oil inventories fell by 2.6 million barrels last week – if confirmed by government data, this would be the eighth consecutive decline. The recent U.S. sanctions are making their impact felt in the market. Russian oil buyers are increasingly turning to other OPEC+ countries after nations like India rejected sanctioned tankers. In China, state oil companies and major private refineries have begun purchasing cargo from the Middle East and other regions to prepare for possible trade disruptions. This has driven up freight rates while also altering price structures in the U.S. The year began promisingly for the oil market, not least due to tightened U.S. sanctions, increased heating demand due to colder temperatures in the northern hemisphere, and continuously declining U.S. inventories. The early upward movement contrasts with widespread expectations that prices would struggle with an oversupply in 2025. Wednesday is eagerly anticipated as both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) are set to release their monthly market outlooks. On Tuesday, the U.S. Energy Information Administration had already forecasted a broader supply surplus for 2025.