Oil extends gains

Brent crude oil futures climbed toward $70 per barrel on Friday, extending gains of over 1% from the previous session, as markets balanced escalating supply risks against lingering uncertainty over US trade and tariff policy.

The move upward came despite oil being on track for a weekly loss of more than 1%—its first in three weeks—as geopolitical developments and seasonal demand offered support, while concerns over future policy and production dynamics capped further upside.

Supply disruptions remained a key driver. In Iraq’s semi-autonomous Kurdistan region, drone attacks earlier in the week damaged infrastructure and forced a temporary halt in production of up to 150,000 barrels per day, tightening near-term supply in a region already grappling with intermittent conflict.

Meanwhile, broader instability in the Middle East—heightened by Israeli airstrikes in Syria targeting militia-linked infrastructure—added to fears of wider regional escalation that could jeopardize crude flows through key transit routes.

Seasonal factors also contributed to upward pressure on prices. With summer travel in full swing across the Northern Hemisphere, global oil consumption has averaged 105.2 million barrels per day so far in July, according to industry surveys—near record highs.

Increased gasoline and jet fuel demand, especially in the US, Europe, and parts of Asia, has further strained refined product inventories. In line with that, US Energy Information Administration (EIA) data earlier this week showed a sharper-than-expected draw in crude inventories, suggesting a tightening domestic market.

However, gains remained restrained amid ongoing uncertainty around US tariff policy. Markets are awaiting clarity on whether a resolution will be reached between Washington and its trade partners before the self-imposed August 1 deadline. President Donald Trump has signaled a willingness to proceed with additional tariffs if negotiations fail, a move that could weigh on global growth and energy demand. This has kept risk appetite in check among energy traders.

Adding to the cautious tone, major oil-producing nations, including members of OPEC+ such as Saudi Arabia and Russia, have hinted at plans to gradually unwind coordinated production cuts implemented earlier in the year. While such moves aim to normalize output as demand recovers, they also risk putting downward pressure on prices if demand softens unexpectedly.

Lastly, market sentiment was further tempered by President Trump’s recent ultimatum to Russia, giving Moscow 50 days to agree to a ceasefire in Ukraine or face renewed pressure. While the move appeared aggressive, it also eased fears of imminent US sanctions on Russian oil exports, which could have caused major disruptions to global supply. As a result, some of the geopolitical risk premium embedded in prices earlier in the week unwound slightly by Friday.

Overall, while short-term supply threats and robust seasonal demand are lending support to Brent crude, broader macro and policy uncertainties continue to create a tug-of-war in the oil market, keeping prices range-bound and volatility elevated.