Oil extended its rally after a Russian air strike against Ukraine heightened geopolitical tensions amid the prospect of tighter Western sanctions.
Brent futures traded near $74 a barrel, heading for a weekly gain of almost 4%. Talk of more sanctions on Russian and Iranian oil helped offset concerns about a supply glut. Moscow’s attack stoked the rally further.
In the options market, traders are again bracing for a price spike. Call options, which profit when prices rise, were at a premium to puts for the first time in three weeks at the close of trading on Thursday. Implied volatility also climbed.
“Last time Donald Trump was president he drove down Iranian oil exports to close to zero,” SEB AB said in a report. “A repeat of that would remove all talk about a surplus oil market next year.”
Trump’s pick for national security adviser this week vowed a return to “maximum pressure” on Iran, while the Biden administration is considering new sanctions on Russia’s oil trade. The European Union has meanwhile given preliminary backing to a 15th package of sanctions against Russia.
On Friday, Moscow forces fired almost 200 drones and more than 90 missiles, including at least one made by North Korea, Ukrainian President Volodymyr Zelenskiy said on Telegram. Neighboring Poland scrambled fighter jets in response.
While more sanctions would potentially support prices, the International Energy Agency on Thursday said global oil markets face a glut in 2025, despite last week’s decision by OPEC+ to delay supply increases.
The prediction runs counter to the outlook from the US Energy Information Administration, which this week said it broadly sees markets in balance next year.
Brent for February settlement was 0.4% higher at $73.73 a barrel as of 9:03 a.m. in New York. WTI for January delivery rose 0.5% to $70.35 a barrel.
Source : Bloomberg
Oil Set for Weekly Jump on Russian Air Strike, Sanctions Outlook
