Crude Oil Prices Surge Amid Geopolitical Tensions and Supply Concerns

Key Takeaways

1. Crude Oil Prices: Brent crude rose by $1.42 (1.95%) to $74.23 per barrel, WTI crude climbed by $1.35 (2%) to $70.10 per barrel, MCX crude opened at ₹5,938, up 0.56%.
2. Supply-Side Developments: OPEC+ may delay planned output increases amid weak demand, potentially causing supply tightness.
3. Demand Projections: Global oil demand is forecasted to grow by 990,000 bpd in 2025, according to the IEA.
4. Inventory Data: Gasoline stocks rose by 2.054 million barrels, while distillate stockpiles fell by 0.114 million barrels.
5. Expert Insights: Tighter crude and refined product supply is supporting price increases despite demand concerns.

Petroleum Prices: Crude Oil Prices Surge Amid Geopolitical Tensions

• Crude oil prices increased by about 2% on Friday as tensions between Russia and Ukraine continued to heighten. The countries launched missiles at each other, worrying markets about crude supply. Brent crude soared by $1.42 or 1.95% to $74.23 per barrel, while US West Texas Intermediate (WTI) crude rose by $1.35 or 2% to $70.10 per barrel. MCX crude oil prices opened at 5,938, gaining 0.56%.

Petroleum Demand and Supply: Global and US Demand Forecasts for 2025

• China on Thursday announced policy measures to boost trade, including support for energy product imports, amid concerns over US President-elect Donald Trump’s threats to impose tariffs.
• Meanwhile, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) may consider postponing output increases when it meets on December 1, due to weak global oil demand.
• The 22-member alliance, which produces about half of the world’s oil, had initially planned to gradually reverse production cuts from late 2024 through 2025. This delay could provide support to the market.
• Iran, also a member of OPEC+, has agreed to stop stockpiling uranium, easing tensions in the Middle East.
• However, signals of slower-than-expected interest rate cuts in the US continue to affect the global economy. Elevated borrowing costs could slow economic activity and dampen oil demand in the short term.

Petroleum News: Impact of Inventory Data on Price Trends

• Crude oil prices rose by 1.32%, settling at ₹5,905, supported by escalating geopolitical tensions between Russia and Ukraine.
• Reports revealed that Russia launched an intercontinental ballistic missile at Ukraine, further intensifying the conflict. Additionally, traders are focusing on the upcoming OPEC+ meeting on December 1, amid speculation of delays in planned output increases.
• Temporary output reductions of 28%-30% at Kazakhstan's Tengiz oil field due to repairs have further tightened global supplies, although production is expected to normalize shortly.
• On the demand-supply side, the International Energy Agency (IEA) has warned of a potential supply deficit of over 1 million barrels per day (bpd) by 2025 if OPEC+ cuts persist.
• Global oil demand is projected to grow by 990,000 bpd next year, while U.S. demand is expected to rise to 20.5 million bpd, slightly below previous forecasts, according to the U.S.
• Energy Information Administration (EIA). Inventory data revealed a mixed picture:
• U.S. crude oil inventories rose by 0.545 million barrels last week, exceeding expectations.
• Gasoline stocks climbed by 2.054 million barrels, surpassing forecasts.
• Distillate stockpiles dropped by 0.114 million barrels, while crude stocks at Cushing declined by 0.140 million barrels, indicating localized supply tightness.

Expert Opinion: Refining Margins and Export Demand

• In recent days, bullish signs have emerged, with premiums for refined products over crude climbing to multi-month highs. In the US, a proxy for margins from refining crude into gasoline and diesel reached its highest level since August, as Gulf Coast fuel makers ramped up production to meet rising export demand.