HG MARKETS:

Oil prices saw a modest increase on Friday, with a weekly rise set to exceed 4%, driven by intensifying tensions in Ukraine. This marks the most significant weekly gain since late September, as geopolitical uncertainties heightened concerns over global oil supply disruptions. On Thursday, oil contracts surged by 2%, as Russian President Vladimir Putin warned of the possibility of a global conflict following an escalation in the Ukraine war. Putin confirmed that Russia had launched a ballistic missile at Ukraine and further cautioned that the ongoing war could spiral into a broader international crisis.

Russia’s role as one of the world’s top oil producers is central to these concerns. Despite facing output declines due to Western sanctions and the actions of OPEC+, Russia is still producing around 9 million barrels of oil per day. However, the escalation of the conflict, including Ukraine’s use of drones to target Russian oil infrastructure, has the potential to disrupt oil flows. Notably, in June, Ukraine successfully used long-range attack drones to strike Russian refineries, a tactic that has raised alarms in global energy markets.

In addition to the military tensions, economic factors are contributing to the oil price spike. On Thursday, China, the world’s largest oil importer, announced new policy measures designed to stimulate trade, including increased support for energy product imports. This comes amid growing concerns over the impact of former President Trump’s potential tariffs, which could affect global oil prices and trade dynamics.

These combined factors have heightened fears of supply shortages, pushing oil prices higher and increasing the uncertainty surrounding global energy markets. With the war in Ukraine showing no signs of abating, and geopolitical tensions between Russia, the West, and China continuing to rise, market analysts are closely monitoring the situation, which could have long-term ramifications for oil prices worldwide