Oil on rollercoaster as Brent hovers around $71 per barrel

Oil prices have been fluctuating with modest gains and losses over the past two weeks, with Brent futures hovering around $71 per barrel. On one hand, geopolitical factors have been exerting upward pressure on prices.

Oil on rollercoaster as Brent hovers around $71 per barrel

Tensions in the Middle East have escalated as Israel launched a new ground operation in Gaza, breaking a two-month ceasefire, while the United States continued airstrikes against Iran-supported Houthi rebels in Yemen. These developments have raised concerns about disruptions in regional oil supply routes, contributing to price volatility. Additionally, a ceasefire between Ukraine and Russia remains elusive, despite a temporary halt in strikes on energy facilities and pledges by leaders such as former President Trump and Ukrainian President Zelensky to work towards ending the conflict. The ongoing uncertainty surrounding the war in Ukraine has kept global energy markets on edge, particularly as Russia’s role in the oil market remains a key factor.

Supply side of the market appears balanced

On the other hand, the supply side of the market appears relatively balanced. Although gasoline inventories fell for the third consecutive week and by more than expected, crude oil stocks increased more than anticipated for the second week in a row. This suggests that, while demand for refined products like gasoline is tightening, crude oil supply is adequate to meet current consumption levels. Additionally, traders are anticipating an increase in supply as OPEC+ announced plans to raise production by 138,000 barrels per day (bpd) in April, marking its first output increase since 2022. While the increase is relatively modest, it signals the group's readiness to address rising demand or supply concerns, especially amid potential disruptions from geopolitical factors. As a result, oil prices have been caught between these opposing forces—geopolitical risks supporting higher prices and the balanced supply picture, which prevents any significant price spikes. Traders will continue to monitor both the developments in global conflicts and the OPEC+ production adjustments, as any shifts in these dynamics could trigger further price fluctuations in the weeks ahead.