Oil prices climbed about 2% on Friday, reaching a three-week high on expectations of tighter supplies from sanctions on Russia and Iran, and optimism that lower interest rates in Europe and the U.S. could boost fuel demand. Brent crude settled at $74.49, up $1.08 (1.5%), while U.S. West Texas Intermediate (WTI) rose $1.27 (1.8%) to $71.29. For the week, Brent gained 5%, its highest close since Nov. 22, and WTI increased by 6%, reaching its highest level since Nov. 7.
Market strength was supported by geopolitical factors, including the European Union’s 15th sanctions package targeting Russia’s shadow tanker fleet, and potential sanctions on Iran to curb its nuclear ambitions. Additionally, Chinese crude imports rose annually in November for the first time in seven months and are expected to remain elevated into 2025, driven by favorable prices and refinery demand. The International Energy Agency (IEA) revised its 2025 global demand growth forecast to 1.1 million barrels per day (bpd), citing China’s stimulus measures.
While the IEA forecast a global oil surplus in 2025, with non-OPEC+ nations like Argentina, Brazil, Canada, Guyana, and the U.S. expected to increase supply by 1.5 million bpd, OPEC+ members like the UAE are reportedly tightening shipments. Meanwhile, Iranian crude sold to China hit its highest price in years due to U.S. sanctions tightening logistics. Speculation around U.S. Federal Reserve rate cuts, supported by weak economic data, and similar moves by the European Central Bank, added optimism for economic growth and stronger oil demand.