Oil prices rose in Asian trade on Friday as traders placed a higher risk premium on crude oil amid growing concerns over Russia and Ukraine, capping a positive week.
Supply disruptions in Norway and a brief drop in the dollar also supported oil prices early in the week, along with reports that the Organization of Petroleum Exporting Countries and allies (OPEC+) were likely to postpone planned production increases.
The increased risk premium helped oil weather a bigger-than-expected rise in U.S. stockpiles.
Brent oil futures for January expiration rose 0.4% to $74.54 a barrel, while West Texas Intermediate crude futures rose 0.5% to $70.10 a barrel by 20:44 ET (01:44 GMT). Both contracts were trading between 4% and 5% higher for the week.
Russia-Ukraine tensions lead oil to weekly gains
Oil’s gains this week were driven by concerns about supply disruptions stemming from the Russia-Ukraine war, particularly after Kiev began using Western-made long-range missiles.
Russia had responded by lowering its threshold for nuclear retaliation. On Thursday, reports said Russia had fired a hypersonic medium-range ballistic missile at Ukrainian targets, with President Vladimir Putin warning that more missiles could be fired.
Oil markets are particularly concerned that Ukraine could damage Russia’s energy infrastructure, disrupting its oil output and reducing global supplies. That perception has been a major point of support for crude.
But oil also benefited from some bargain-hunting, especially after posting steep losses in October on concerns about slowing demand in top importer China.
OPEC+ May Postpone Production Hike – Reuters OPEC+ is considering postponing planned production increases until next year, Reuters reported this week, amid persistent concerns about a slowdown in demand and a drop in prices.
The cartel had initially planned to raise output from late 2024, but has repeatedly postponed these plans through the start of the year.
The cartel is expected to do so again at its meeting on Dec. 1. Rising supply outside OPEC is also expected to weigh on oil prices in the coming year, with analysts forecasting the possibility of a supply glut. This forecast has also made OPEC wary of raising production.