FX.co ★ Oil Set for Second Weekly Drop

WTI crude oil futures slipped below $56 per barrel on Friday, marking a second consecutive weekly decline. This downturn is largely attributed to concerns over excess supply overshadowing geopolitical threats. Earlier this week, prices plummeted to their lowest point in nearly five years. This trend is influenced by expectations of robust supply as OPEC+ gradually reinstates deactivated production capacities, while non-OPEC producers continue to increase their output. Additionally, preliminary signs of weakening demand are surfacing in key markets such as China and the United States, culminating in a roughly 20% decrease in oil prices this year. However, escalating geopolitical tensions have somewhat mitigated these losses, amplifying fears of potential supply disruptions. The United States recently suspended all maritime operations involving sanctioned Venezuelan oil tankers following the seizure of a blacklisted vessel. Furthermore, the U.S. is escalating efforts to reinforce sanctions against Russia’s energy sector to bolster peace initiatives in Ukraine. Similarly, the United Kingdom has implemented sanctions targeting three smaller Russian oil companies.