Crude oil prices today climbed to their highest level since last fall at just under 81 dollars per barrel ($/b). The price rally was triggered by Washington’s announcement to add a further 160 oil tankers of the Shadow Fleet to the sanctions list.
The step will make Russian oil exports to its main clients India and China more difficult. The result could be increased demand for other oil suppliers and tighten the previously quite relaxed situation on the oil market.
However, a look at our price chart shows that we are still a long way from an oil price crisis. On average, oil prices in January were 77 $/b, which is even lower than last year.
From an oil market perspective, 2024 was unusually calm despite many international conflicts. The volatility of oil prices (in real prices) was at its lowest level in two decades. On average, Brent crude oil cost 80 dollars per barrel, which is an average price level, as our overview of the last 25 years shows.
Where do we go from here? Looking only at the expected balance of oil supply and demand, there is little to suggest that oil prices will remain high. There is a growing supply of oil against an only moderately growing demand for oil. Added to this is the very high spare capacity of the OPEC+ cartel countries, which could compensate for possible shortfalls of up to 6 percent of the global oil supply – on a par with Russia’s total crude and oil products exports.
This leaves the political risks. The Middle East wars have only a minor impact on oil prices. With regard to the Russia sanctions, it is still unclear what course the new Trump administration will ultimately pursue. In his first term in office, Trump was primarily concerned with keeping domestic petrol station prices low.
However, in his second and therefore final term, election tactics could play less of a role. Previous statements (on Greenland, Canada, Panama Canal) rather indicate that he wants to secure a place in the history books. The geopolitical risks, including for oil prices, could therefore increase.
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