Oil prices are currently experiencing downward pressure due to easing geopolitical tensions regarding Iran, which had previously supported prices. However, new trade tensions introduced by the US are raising concerns about future energy demand, countering the positive impact of potential supply constraints in certain regions. Expectations of a supply surplus are also weighing on the market.
- WTI crude oil futures fell below $59 per barrel after a four-week winning streak.
- Cooling tensions in Iran have lessened concerns about supply disruptions.
- President Trump hinted at delaying military action, contingent on Iran not executing protesters, but warned of potential future action.
- New US tariffs on European goods, beginning February 1st and potentially escalating, are creating worries about reduced energy demand.
- Supply constraints persist in some areas, such as Kazakh exports facing Black Sea disruptions.
- Expectations of a supply surplus are weighing on oil prices.
The confluence of factors indicates a complex environment for oil. Reduced geopolitical risk has eased immediate upward pressure, but newly emerging trade disputes could negatively impact demand, potentially leading to price declines. Supply disruptions in certain regions are offering a degree of price support, but this may be insufficient to counter the combined effect of trade worries and expected oversupply, suggesting a potentially bearish outlook for the near term.