Oil was little changed near $80 a barrel, as the impact of US sanctions against Russian flows continued to reverberate and the International Energy Agency dialed back its bearish view for the year. Global oil markets face a smaller surplus this year than previously expected, the IEA said, with inventories set to grow by 725,000 barrels a day in 2025. The agency also fractionally increased global consumption estimates.
Elsewhere, the American Petroleum Institute said crude inventories fell by 2.6 million barrels last week. That would be an eighth draw, if confirmed by official data.
The impacts of the latest US sanctions are rippling through markets. Buyers of Russian oil are increasingly turning to other OPEC+ suppliers, as nations including India said they would bar sanctioned tankers.
In China, state oil companies and large private refiners have been snapping up cargoes from the Middle East and elsewhere in preparation for disruption. Freight costs have surged, while US physical pricing patterns have also shifted.
Crude has seen a strong start to the year, with the latest US sanctions adding to gains driven by a colder Northern-Hemisphere winter sending heating demand higher, and the steady fall in US stockpiles. The early advance runs counter to widespread expectations that prices would struggle in 2025 as supplies were tipped to run ahead of demand, driving a global surplus.
After jumping more than 6% in three days on supply disruption concerns, crude futures have eased in the past two sessions.
“Following the announcement of the new sanctions, the immediate market panic from last week has now subsided,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. Much also suggests that the market was technically overbought.
On Tuesday, the US Energy Information Administration’s latest report signaled oversupply in 2025 and 2026, although estimates were produced before the latest sanctions against Russia.
In addition to the ructions caused by the US sanctions, traders are weighing the implications of President-elect Donald Trump’s second term in the White House. These include the possibility of tighter curbs on Iranian exports, potential trade tariffs that could ensnare Canadian oil, as well as moves to encourage domestic production.
