Crude oil prices reached a three-week high on Wednesday, driven by growing concerns over supply disruptions and increasing demand, despite technical analysts warning that the oil market may be over-bought.
During the Asian trading session, Brent crude futures climbed 0.35% to $77.32 per barrel, while WTI futures rose 0.50% to $74.61 per barrel, marking their highest levels since October 14. This follows a nearly 1% increase in both benchmarks on Tuesday, with supply disruptions and rising winter energy demands outweighing broader economic uncertainties. Crude prices are on track to notch a third consecutive weekly gain after hitting near three-year lows in early December.
The surge in prices comes amid mounting concerns over limited supply from Iran and Russia. The Biden administration is set to impose additional sanctions on Russian oil exports ahead of Donald Trump’s inauguration on January 20. These sanctions will target tankers carrying Russian crude priced above the $60 per barrel cap set by the US and its European allies. Meanwhile, Trump is expected to ramp up restrictions on Iranian oil exports, potentially leading to a disruption of up to one million barrels per day—about 1% of global supply.
On Monday, China’s Shandong Port Group issued a notice prohibiting US-sanctioned oil vessels, a move that could exacerbate the supply constraints on Iranian oil. Shandong Port, a critical oil-importing hub in eastern China, manages three major terminals.
Bloomberg also reported that Russia’s crude production in December fell short of its OPEC+ target, with the country producing 8.971 million barrels per day—7,000 barrels per day below its agreed quota.
In response to a slowdown in global demand and rising US production, OPEC+ has delayed its plan to unwind joint output cuts. The organization, which supplies about half of the world’s oil, has postponed its production increases by three months, with full output recovery now expected by the end of 2026.
Data from the American Petroleum Institute (API) indicated that US oil inventories may have fallen for the seventh consecutive week ending January 5. If confirmed by the Energy Information Administration (EIA) later today, this could signal rising energy demand amid a severe winter in the US, Europe, and Asia.
