Oil prices edge higher amid uncertainty over sanctions impact
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Oil prices ticked up on Wednesday, recovering some ground after the previous session’s decline. The market remains focused on the potential supply disruptions from sanctions on Russian tankers, but gains were limited as traders awaited clearer insights into the sanctions’ actual impact.
Brent and WTI prices rebound
Brent crude futures rose by 51 cents, or 0.6%, to trade at $80.43 a barrel as of 0735 GMT. U.S. West Texas Intermediate (WTI) crude climbed 64 cents, or 0.8%, to $78.14 a barrel. This comes after both benchmarks suffered losses of over 1% on Tuesday.
The rebound followed data from the American Petroleum Institute (API), which reported a significant drop in U.S. crude stockpiles. According to market sources, inventories fell by 2.6 million barrels for the week ending January 10, surpassing expectations of a 1-million-barrel decline. However, gasoline inventories rose by 5.4 million barrels, and distillate stocks increased by 4.88 million barrels, reflecting mixed signals for demand.
Russian sanctions and market dynamics
The potential reduction of Russian oil supply continues to dominate market sentiment. Sanctions targeting Russian tankers have raised questions about how much crude will be removed from global markets and whether alternative sources can compensate for the shortfall.
Yeap Jun Rong, a market strategist at IG, noted that “the dominant driver has been all about the Russian oil sanctions lately, compounded by a streak of stronger U.S. economic data.” He cautioned that near-term price corrections are possible as the market digests last week’s sharp gains.
EIA projections and longer-term outlook
On Tuesday, the U.S. Energy Information Administration (EIA) projected that oil markets would face pressure over the next two years, with supply outpacing demand. The agency forecasted global demand to average 104.1 million barrels per day (bpd) in 2025, while supply is expected to reach 104.4 million bpd.
Brent crude prices are anticipated to average $74 per barrel in 2025, an 8% drop from current levels, before falling further to $66 per barrel in 2026. WTI is projected to average $70 per barrel in 2025 and decline to $62 in 2026.
Stockpile trends and immediate support
Crude oil inventories in the U.S., the world’s largest oil consumer, provided some support for prices. While stockpiles at the Cushing, Oklahoma hub increased by 600,000 barrels, they remain historically low. This tight supply situation at a critical delivery location for WTI futures contracts has underpinned recent price strength.
Outlook: balancing supply and demand factors
As traders navigate mixed signals from stockpile data, Russian sanctions, and long-term demand forecasts, the oil market remains poised for volatility. The upcoming release of official EIA stockpile data will likely provide further direction, as will ongoing assessments of the sanctions’ tangible effects on global supply.
Brent and WTI prices rebound
Brent crude futures rose by 51 cents, or 0.6%, to trade at $80.43 a barrel as of 0735 GMT. U.S. West Texas Intermediate (WTI) crude climbed 64 cents, or 0.8%, to $78.14 a barrel. This comes after both benchmarks suffered losses of over 1% on Tuesday.
The rebound followed data from the American Petroleum Institute (API), which reported a significant drop in U.S. crude stockpiles. According to market sources, inventories fell by 2.6 million barrels for the week ending January 10, surpassing expectations of a 1-million-barrel decline. However, gasoline inventories rose by 5.4 million barrels, and distillate stocks increased by 4.88 million barrels, reflecting mixed signals for demand.
Russian sanctions and market dynamics
The potential reduction of Russian oil supply continues to dominate market sentiment. Sanctions targeting Russian tankers have raised questions about how much crude will be removed from global markets and whether alternative sources can compensate for the shortfall.
Yeap Jun Rong, a market strategist at IG, noted that “the dominant driver has been all about the Russian oil sanctions lately, compounded by a streak of stronger U.S. economic data.” He cautioned that near-term price corrections are possible as the market digests last week’s sharp gains.
EIA projections and longer-term outlook
On Tuesday, the U.S. Energy Information Administration (EIA) projected that oil markets would face pressure over the next two years, with supply outpacing demand. The agency forecasted global demand to average 104.1 million barrels per day (bpd) in 2025, while supply is expected to reach 104.4 million bpd.
Brent crude prices are anticipated to average $74 per barrel in 2025, an 8% drop from current levels, before falling further to $66 per barrel in 2026. WTI is projected to average $70 per barrel in 2025 and decline to $62 in 2026.
Stockpile trends and immediate support
Crude oil inventories in the U.S., the world’s largest oil consumer, provided some support for prices. While stockpiles at the Cushing, Oklahoma hub increased by 600,000 barrels, they remain historically low. This tight supply situation at a critical delivery location for WTI futures contracts has underpinned recent price strength.
Outlook: balancing supply and demand factors
As traders navigate mixed signals from stockpile data, Russian sanctions, and long-term demand forecasts, the oil market remains poised for volatility. The upcoming release of official EIA stockpile data will likely provide further direction, as will ongoing assessments of the sanctions’ tangible effects on global supply.