WTI crude oil futures experienced a dip, falling below $65 per barrel on Friday, yet remained on course for its strongest month since July 2023. This performance is largely attributed to an increased geopolitical risk premium stemming from renewed US-Iran tensions and potential disruptions to shipping through the Strait of Hormuz. Several additional factors, including tensions in Venezuela, production issues in Kazakhstan, US production freezes, and tighter restrictions on Russian oil purchases, have contributed to upward price pressure despite concerns about potential oversupply.
- WTI crude oil futures fell below $65 per barrel.
- Oil is on track for its best month since July 2023.
- Geopolitical risk premium is rising.
- US-Iran tensions are escalating, impacting shipping through the Strait of Hormuz.
- Additional factors supporting oil prices include tensions in Venezuela, production outages in Kazakhstan, US production freeze-offs, and tightening US restrictions on Russian oil.
- Oversupply expectations exist.
These details indicate a complex market for oil, where geopolitical instability and supply constraints are currently outweighing concerns about a potential surplus. The Strait of Hormuz remains a critical chokepoint and any disruption there could have significant ramifications for global energy prices. Other factors, such as US-Iran relations, Venezuelan issues, Kazakhstan production, US freezes, and sanctions on Russian oil, also add volatility to the market, making it more sensitive to supply-side shocks. These combined influences have pushed oil prices higher, establishing a bullish trend despite the backdrop of global oversupply considerations.