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LONDON: Oil prices rose by around 1 percent on Friday as investors weighed a tight prompt market against a potential large surplus this year forecast by the IEA, while US tariffs and possible further sanctions on Russia were also in focus.
Brent crude futures were up 76 cents, or 1.11 percent, at $69.40 a barrel as of 2:53 p.m. Saudi time. US West Texas Intermediate crude ticked up 82 cents, or 1.23 percent, to $67.39 a barrel.
At those levels, Brent was headed for a 1.6 percent gain on the week, while WTI was up around 0.6 percent from last week’s close.
The IEA said on Friday the global oil market may be tighter than it appears, with demand supported by peak summer refinery runs to meet travel and power-generation.
Front-month September Brent contracts were trading at a $1.11 premium to October futures at 2:53 p.m. Saudi time.
“Civilians, be they in the air or on the road, are showing a healthy willingness to travel,” PVM analyst John Evans said in a note on Friday.
Prompt tightness notwithstanding, the IEA boosted its forecast for supply growth this year, while trimming its outlook for growth in demand, implying a market in surplus.
“OPEC+ will quickly and significantly turn up the oil tap. There is a threat of significant oversupply. In the short term, however, oil prices remain supported,” Commerzbank analysts said in a note.
Further adding support to the short-term outlook, Russian deputy prime minister Alexander Novak said on Friday that Russia will compensate for overproduction against its OPEC+ quota this year in August-September.
Longer term, however, rival forecasting agency OPEC cut its forecasts for global oil demand in 2026 to 2029 because of slowing Chinese demand, the group said in its 2025 World Oil Outlook published on Thursday.
Both benchmark futures contracts lost more than 2 percent on Thursday as investors worried about the impact of Trump’s evolving tariff policy on global economic growth and oil demand.
“Prices have recouped some of this decline after President Trump said he plans to make a ‘major’ statement on Russia on Monday. This could leave the market nervous over the potential for further sanctions on Russia,” ING analysts wrote in a client note.
Trump has expressed frustration with Russian President Vladimir Putin due to the lack of progress on peace with Ukraine and Russia’s intensifying bombardment of Ukrainian cities.
The European Commission is set to propose a floating Russian oil price cap this week as part of a new draft sanctions package, but Russia said it has “good experience” of tackling and minimizing such challenges.