Islamabad, Feb 12: Oil prices climbed to a two-week peak on Tuesday as heightened sanctions fueled concerns about disruptions in Russian and Iranian oil supplies. Additionally, rising tensions in the Middle East overshadowed worries that trade tariffs could stoke inflation and slow global economic growth.
Brent crude rose by $1.13, or 1.5%, closing at $77.00 per barrel, while U.S. West Texas Intermediate (WTI) crude gained $1.00, or 1.4%, settling at $73.32. This marks the third consecutive day of price increases and the highest levels since January 28.
Analysts attribute this surge to the impact of U.S. sanctions targeting oil shipments. Restrictions on tankers, producers, and insurers have significantly hampered Russian oil exports to major buyers like China and India. Similarly, recent U.S. sanctions against networks transporting Iranian oil to China have added to market concerns.
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Adding to the supply strain, tensions in the oil-rich Middle East continue to escalate. Israeli Prime Minister Benjamin Netanyahu warned that a fragile ceasefire in Gaza could collapse if Hamas does not release Israeli hostages by Saturday. This statement followed a demand from former U.S. President Donald Trump, who urged Hamas to free all captives or face the cancellation of the ceasefire. Trump also suggested withholding aid to Jordan and Egypt unless they accept Palestinian refugees.
Trade Tariffs and Economic Impact Despite rising oil prices, concerns over global economic stability persist. Trump’s recent decision to impose a 25% tariff on steel and aluminum imports has sparked fears of a trade war. Canada, Mexico, and the European Union have strongly opposed these measures, which could dampen industrial demand for oil.
Morgan Stanley noted in a report that tariffs and retaliatory trade policies could weigh on oil-intensive sectors, creating uncertainty in demand forecasts. Meanwhile, U.S. Federal Reserve Chair Jerome Powell emphasized that while the Fed does not take positions on trade policies, it monitors their economic effects. Economists anticipate that the Fed may delay interest rate cuts until the next quarter.
Global Supply and Demand Outlook According to the U.S. Energy Information Administration (EIA), global oil production and consumption will reach record levels in 2025 and 2026. Production is expected to climb to 106.2 million barrels per day (bpd) in 2026, up from 102.8 million bpd in 2024. Demand is also projected to grow, reaching 105.2 million bpd by 2026.
Market participants are now awaiting U.S. inventory data, with analysts predicting a build-up of approximately 3 million barrels in stockpiles for the week ending February 7. If confirmed, this would mark the third consecutive weekly increase, signaling potential shifts in supply dynamics.
