Oil News: Crude Oil Faces Test as OPEC Weighs Output Hike, Russia Sanctions Loom

Crude Oil Rises 3.33% as Geopolitical Supply Fears Offset Tariff Drag

Crude oil futures ended the week with a solid 3.33% gain, supported by heightened geopolitical risks and relative clarity on global trade deals. WTI settled at $67.33 per barrel, up $2.17 on the week, as market sentiment leaned bullish despite concerns around economic growth and potential OPEC+ supply increases.

Trade Tensions Ease Slightly with Limited Tariff Fallout

Traders initially welcomed progress on trade agreements between the U.S. and several key partners. The European Union, South Korea, Japan, and the U.K. were among those securing exemptions from a sweeping new U.S. tariff package signed on August 1.

However, the executive order imposed 10% to 41% duties on countries like Canada, India, and Taiwan that failed to meet the deadline. While the initial market reaction was muted, analysts flagged the risk of broader economic slowdown and inflationary pressure that could ultimately weigh on oil demand.

Russian Crude Threats Keep Supply Risk Premium Elevated

A key driver of the week’s price strength was mounting concern over global crude supply. President Trump reiterated threats to impose 100% secondary sanctions on countries continuing to purchase Russian oil—namely China and India.

JP Morgan estimated that up to 2.75 million barrels per day of Russian exports could be disrupted if the U.S. follows through. While the market remains skeptical of full enforcement, the threat added a considerable geopolitical risk premium.

OPEC+ Output Strategy Clouded by Uncertainty

Reports late in the week suggested OPEC+ could agree to increase production by 548,000 barrels per day in September. Sources close to the talks noted that discussions were ongoing and that any increase might be smaller than anticipated. The prospect of higher output briefly pressured prices on Friday, but the market maintained its gains as traders assessed broader supply dynamics.

U.S. Macro Data Disappoints, but Refined Product Demand Remains Firm

Economic signals from the U.S. were mixed. The July jobs report missed expectations with just 73,000 jobs added, raising the unemployment rate to 4.2%.

Meanwhile, U.S. crude inventories unexpectedly rose by 7.7 million barrels, though a sharp 2.7 million barrel draw in gasoline stocks pointed to ongoing strength in consumer fuel demand.

Oil Prices Forecast: Cautiously Bullish Amid Geopolitical Risk and Trade Adjustments

Despite persistent macroeconomic uncertainty and potential supply increases from OPEC+, the crude oil market maintains a cautiously bullish tone. The risk of significant Russian export disruption, coupled with resilient refined product demand and stabilizing trade flows, continues to support prices. However, tariff fallout and slower job growth may cap upside in the near term.

The market stays constructive as long as it holds above the 52-week moving average at $64.40. A clean break above $69.89 sets up a run at the June high near $77.09.

Back below the moving average, sellers take control. A break through $62.69 opens the door for a deeper washout.

More Information in our Economic Calendar.