Oil prices rose modestly on Monday as escalating conflict between Russia and Ukraine sparked concerns over potential disruptions to oil supplies. By mid-morning U.S. time, WTI crude was up 1.4% at $67.86 a barrel, while Brent crude climbed 1.5% to $72.12 a barrel.
Key Drivers:
- Geopolitical Risks:
- Reports suggest the Biden administration has permitted Ukraine to strike deep into Russia using U.S.-made weapons.
- This escalation follows Russia’s reported deployment of North Korean troops and raises the prospect of oil infrastructure becoming a target, which could tighten supplies.
- Demand Concerns:
- Persistent worries about weak economic data from China, the world’s second-largest oil consumer, continue to weigh on prices.
- Potential Supply Surplus:
- Analysts at ING highlighted expectations of ample global oil supply in 2025, despite ongoing production cuts by major producers.
- Last week, prices fell over 3% following forecasts by the International Energy Agency (IEA) that supply will outpace demand in the long term.
While geopolitical tensions provide short-term support for oil prices, concerns about global demand and oversupply in the coming years are limiting gains.
