Oil heads for 4th weekly gain as US sanctions hit global supply

Oil prices rose on Friday as the market braces for more supply cuts under Trump. Oil is on course for a fourth straight weekly gain as recent US sanctions on energy trade hit supply, pushing up spot trading prices and shipping costs.

Brent crude futures rose 44 cents, or 0.5%, to $81.73 a barrel by 0443 GMT, while WTI crude futures rose 62 cents, or 0.8%, to $79.3 a barrel.

Brent and WTI have gained 2.5% and 3.6% respectively this week.

Supply concerns stemming from US sanctions on Russian oil producers and tankers, combined with expectations of a demand recovery driven by possible US rate cuts, are boosting the crude market. The expected increase in demand for heating fuel due to cold weather in the US is also a matter of boosting.

The Biden administration announced the expansion of sanctions targeting Russian oil producers and tankers last Friday, followed by further measures against Russia’s military-industrial power and efforts to evade sanctions.

Moscow’s biggest customers, China and India, are now looking for alternative supply sources and methods, which could lead to higher shipping costs.

Investors are also anxiously awaiting the potential upside and downside of Donald Trump’s inauguration next Monday.

Rising supply risks continue to provide broad support for oil prices, with the incoming Trump administration also possible to take a tough stance on Iran and Venezuela, two major suppliers of crude.

Better demand expectations also supported the oil market, with renewed hopes the U.S. Federal Reserve will cut interest rates after data showed inflation in the world’s largest economy was easing.

Fed’s Christopher Waller said on Thursday that inflation was likely to continue to ease, allowing the U.S. central bank to cut interest rates sooner and faster than expected.

Meanwhile, China’s economic data on Friday showed stronger-than-expected economic growth for the fourth quarter and 2024 as a raft of stimulus measures come into effect.

China’s GDP beat estimates, but oil refinery output is set to decline in 2024. China’s oil refinery output in 2024 fell for the first time in more than two decades, excluding the pandemic-hit 2022, according to government data, as plants scaled back production in response to sluggish fuel demand and falling margins.

Also weighing on the market was that Yemen’s maritime security officials said the Houthi militia is expected to announce a halt in its attacks on ships in the Red Sea, after a ceasefire deal in the war in Gaza between Israel and Hamas.

The attacks have been disrupting global shipping and forced firms to take longer, more expensive journeys around southern Africa for more than a year.

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