Oil Prices Stay Calm After Christmas as Global Tensions Raise Quiet Concerns
Oil prices remained mostly steady on Friday as investors carefully watched global political tensions, according to Reuters. Trading activity was low because many markets were still quiet after the Christmas holiday, Reuters reports.
Reuters says Brent crude dropped slightly to about $62 per barrel, while U.S. West Texas Intermediate (WTI) also dipped a little to around $58 per barrel. These small changes show that investors are being cautious rather than panicking.
One big reason for this calm is that oil prices are already having a bad year. According to Reuters, oil is on track for its biggest yearly drop since 2020. Brent crude is down about 17%, while WTI has fallen around 19% compared to the end of last year. Reuters explains that higher oil production from OPEC+ countries and other oil-producing nations has created fears that there will be too much oil on the market next year.
At the same time, some political events are making traders nervous. Reuters reports that the United States carried out airstrikes against Islamic State fighters in northwest Nigeria. However, analysts told Reuters that these strikes are far away from Nigeria’s main oil fields, which are mostly in the southern part of the country. Because of this, traders are not rushing to buy oil.
A senior oil analyst quoted by Reuters explained that the attacks are not affecting oil pipelines or export terminals, so investors are choosing to wait and watch instead of reacting quickly.
Another issue affecting oil markets is Venezuela. Reuters says the White House has ordered the U.S. military to focus on blocking Venezuelan oil exports for at least the next two months. This shows that Washington is using economic pressure rather than military force to deal with the Venezuelan government, Reuters adds.
Still, due to the holiday season, trading activity remains slow. Reuters quotes analysts saying that supply disruptions are now the main factor influencing oil prices, not demand.
Looking ahead, investors are also paying close attention to the Russia-Ukraine situation. According to Reuters, any peace agreement could lead to the removal of sanctions on Russian oil, which would add more oil to the global market and possibly push prices down further.
Reuters reports that Russia and the United States have been discussing peace proposals, and Russian President Vladimir Putin has hinted that Russia might consider a land swap as part of a deal. Ukraine’s President Volodymyr Zelenskiy also said important decisions could be made before the New Year, Reuters notes.
As Reuters clearly shows, oil prices are no longer reacting sharply to every global conflict. Instead, the market seems more worried about having too much oil than too little. Even with wars, sanctions, and military strikes making headlines, traders appear to believe that global supply is strong enough to absorb shocks. This calm reaction suggests that unless oil production is seriously disrupted, prices may continue to struggle in the coming months.
Source: Reuters