Oil prices remained steady after posting a weekly gain as the US signaled it could implement stricter sanctions on Russian crude exports. At the same time, Chinese authorities reiterated their commitment to boosting the nation’s economic recovery.
Brent crude was trading above $74 per barrel, after rising nearly 5% last week, while West Texas Intermediate hovered around $71. The potential for tighter sanctions on Russian oil, including the possibility of lowering the price cap on Russian crude, remains on the table as the US aims to further limit Moscow’s ability to finance its war in Ukraine. Treasury Secretary Janet Yellen discussed these possibilities in an interview with Reuters, underscoring ongoing efforts to apply economic pressure on Russia.
In a related development, the European Union has imposed fresh sanctions targeting Russia’s so-called “shadow fleet” of oil tankers, which has been used to circumvent Western sanctions. This move reflects a coordinated effort by Western nations to close loopholes and limit Russia’s oil exports despite ongoing geopolitical tensions.
The oil market has remained in a tight range since mid-October, with concerns over geopolitical risks offset by expectations of an oversupply next year, particularly with a subdued economic outlook from China, the world’s largest oil importer. China’s recent pledge to stimulate its economy has provided some support for oil prices, though data showed a 2% year-on-year decline in China’s apparent oil demand in November, amounting to just over 14 million barrels. Additionally, key economic indicators, such as home sales and consumer spending, showed signs of weakness.
Oil prices have been particularly sensitive to shifts in geopolitical dynamics, with supply concerns emerging as a significant upside risk. However, analysts, such as Vivek Dhar from the Commonwealth Bank of Australia, caution that the overall outlook remains bearish. Dhar predicts that Brent crude could dip to $70 per barrel in 2025, driven by an expected oversupply of oil as non-OPEC+ production growth outpaces global demand.
In another development affecting the global oil market, OPEC+ member the United Arab Emirates (UAE) announced plans to reduce its crude exports early next year, as part of the group’s ongoing efforts to maintain tighter discipline in meeting production targets. The Abu Dhabi National Oil Company (ADNOC) has already informed some customers in Asia that it will cut its crude cargo allocations for early 2025.
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