WTI crude oil rises on supply risks and geopolitical tensions
WTI crude holds above $72.00 as geopolitical tensions fuel supply concerns
West Texas Intermediate (WTI) crude oil continues its upward trajectory, trading at $72.92 per barrel, marking a third consecutive day of gains. Brent crude also advanced to $76.6, supported by tightening supply and escalating geopolitical risks.
The recent rally comes as Russian oil production fell below its OPEC+ quota in January, with output declining to 8.962 million barrels per day, according to Bloomberg sources.
Geopolitical uncertainty remains a key driver. Reports indicate that drone attacks on Russian refineries and retaliatory strikes on Ukraine’s energy infrastructure have heightened concerns over supply disruptions. Additionally, new U.S. sanctions targeting Iranian crude exports to China have increased pressure on Tehran, adding further constraints to global oil flows.
USOIL price dynamics (Jan 2025 - Feb 2025) Source: TradingView.
Trade tensions and economic uncertainty cap gains
Despite the supply-driven rally, oil prices face resistance due to growing economic concerns stemming from U.S. President Donald Trump's trade policies. The recent 25% tariff on steel and aluminum imports has triggered worries about slowing global growth, which could weigh on U.S. energy demand, given its position as the world’s largest oil consumer.
Market participants are also watching U.S. Federal Reserve policy expectations, with analysts revising forecasts for interest rate cuts. Many now anticipate the first cut in June instead of March, as inflation concerns persist. Higher rates could slow economic activity, dampening crude oil demand.
Market outlook: Will oil extend its gains?
While short-term fundamentals favor higher prices, lingering economic and trade uncertainties could limit the rally. If the Federal Reserve delays rate cuts further, it may exert downward pressure on energy markets. However, geopolitical risks—including potential escalation in Middle East tensions following Trump’s comments on Israel and Hamas—could provide continued support for oil prices.
On the basis of previously analyzed charts, WTI remains bullish above $72, but a failure to break past $73.5-$74 could trigger renewed selling pressure. Key support remains at $70, while a decisive break above $76 would signal further upside potential.
