Oil Prices Surge Amid Geopolitical Tensions

Oil prices have been on the rise due to escalating geopolitical tensions, particularly following the U.S. decision to allow Ukraine to use long-range missiles against Russia, which has raised concerns of increased conflict. West Texas Intermediate crude surged over 3% to settle above $69 a barrel, while Brent crude rose to over $73, bolstered by a weaker dollar and speculator activity. Additionally, a power outage at Norway’s Johan Sverdrup oilfield led to a halt in production, which further tightened the North Sea crude market. However, despite these short-term gains, the oil market is predicted to face a surplus in supply for the first half of 2025, creating a potential contradiction as prices rise against a backdrop of excess supply. Concerns over declining crude demand in China and increased Russian exports add bearish pressure to the market, highlighting a complex landscape of conflicting signals. The situation remains fluid as traders navigate through both geopolitical developments and market fundamentals.