Oil prices climbed more than 2% on Friday after the International Energy Agency (IEA) said the global market may be tighter than it seems, supported by strong summer demand. Meanwhile, concerns over new US tariffs and possible fresh sanctions on Russia also added upward pressure.Brent crude rose $1.72, or 2.5%, to settle at $70.36 per barrel, while US West Texas Intermediate (WTI) gained $1.88, or 2.8%, to close at $68.45. Brent recorded a 3% weekly increase, while WTI achieved a 2.2% gain over the week. September Brent contracts maintained approximately a $1.20 premium compared to October futures.The IEA indicated global oil markets might be more restricted than visible, with consumption bolstered by peak summer refinery operations supporting travel and electricity generation.US energy companies reduced oil and natural gas rig operations for an eleventh consecutive week, according to Baker Hughes. Such a prolonged reduction hadn’t occurred since July 2020, during the COVID-19 pandemic’s impact on fuel demand.Despite near-term market constraints, the IEA increased its supply growth predictions whilst reducing demand growth forecasts, suggesting a surplus situation.“OPEC+ will quickly and significantly turn up the oil tap. There is a threat of significant oversupply. In the short term, however, oil prices remain supported,” Commerzbank analysts told Reuters.Russian deputy prime minister Alexander Novak announced Russia would address its OPEC+ quota overproduction this year during August-September, supporting short-term price outlook.Near-term demand strength was evidenced by Saudi Arabia’s planned shipment of approximately 51 million barrels of crude oil to China in August, the largest such delivery in over two years.However, OPEC reduced its long-term global oil demand forecasts for 2026-2029, citing declining Chinese demand in its 2025 World Oil Outlook, released on Thursday.Trump had earlier told NBC News that he would deliver a “major statement” regarding Russia on Monday, providing no additional details. He also showed dissatisfaction with Russian President Vladimir Putin regarding the stalled progress in concluding the Ukraine conflict and Russia’s escalating attacks on Ukrainian urban areas.The European Commission plans to introduce a variable Russian oil price ceiling this week within a fresh sanctions proposal, while Russia said it possesses “good experience” in addressing obstacles.
