Why is the Oil Price Rising Today?

Crude is climbing today amid reports that the U.S. may unveil a broader sanctions package targeting Russian tankers.

That’s what Rebecca Babin, a senior equity trader for CIBC Private Wealth in New York, told Rigzone in an interview on Friday when asked why the oil price is rising today.

“This has raised concerns among Indian buyers, who have been the primary purchasers of Russian barrels,” Babin added.

“While this story has been on traders’ radar for the past week, the potential scope of the sanctions appears larger than initially anticipated,” Babin continued.

“Additionally, cold weather across the U.S. is boosting heating oil demand and could tighten supply due to freeze-offs. Breaking above the key $75 resistance level in WTI has likely triggered systematic fund buying, further propelling the rally,” Babin went on to state.

When Rigzone asked Bill Farren-Price, the Head of Gas Research at the Oxford Institute for Energy Studies, why the oil price is rising today in a separate interview on Friday, he told Rigzone he thinks it’s “a combination of cold winter fuel oil and diesel demand, a continued response to OPEC+’s decision in early December to extend cuts, and concerns that Trump 2.0 could mean fresh sanctions on producers”.

When Rigzone asked Tamas Varga, an analyst at PVM Oil Associates, the same question in another interview on Friday, Varga said, “cold weather in Europe and the U.S. raises expectations of distillate stock draw”.

“Existing and planned sanctions on Russia and Iran forces China to look for alternative crude oil supply. It helps Brent. And so does low Cushing stocks, which supports WTI and makes U.S. crude oil exports uneconomic,” Varga added.

Answering the same question in another interview today, Ahmed Ben Salem, an oil and gas analyst at ODDO BHF, told Rigzone, “I guess it is due to lower exports from Russia and Iran and probable lower surplus in 2025 than initially expected”.

In a market analysis sent to Rigzone this afternoon, Samer Hasn, a senior market analyst at XS.com, noted that crude oil prices are on track for a second straight day of gains.

Hasn highlighted in the analysis that Brent and WTI were both up more than two percent today, “hitting their highest levels since October last year”.

“Oil price gains come amid support from a set of positive factors, including favorable weather forecasts, continued announcements of measures to support the Chinese economy, in addition to the potential increase in supply restrictions from Iran and Russia,” Hasn stated in the analysis.

Rigzone approached the White House, the Trump transition team, the Press Service and Information Department of the Russian Government, the Chinese government, the Iranian Ministry of Foreign Affairs, and ministry officials at the Indian Ministry of Power for comment.

In response, Trump-Vance Transition Spokeswoman Karoline Leavitt told Rigzone, “families have suffered under the past four years’ war on American energy, which prompted the worst inflation crisis in a generation”.

“Voters re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail, including lowering energy costs for consumers,” Leavitt added.

“When he takes office, President Trump will make America energy dominant again, protect our energy jobs, and bring down the cost of living for working families,” Leavitt continued.

At the time of writing, the White House, the Press Service and Information Department of the Russian Government, the Chinese government, the Iranian Ministry of Foreign Affairs, and ministry officials at the Indian Ministry of Power have not yet responded to Rigzone.

Rigzone has also contacted the White House for comment on the Trump transition team statement. At the time of writing, the White House has not yet responded to this request either.  

In a Stratas Advisors report sent to Rigzone by the Stratas team late Monday, the company revealed that, “for the upcoming week”, it thought that oil prices would “get a boost from the continuation of support from the factors of last week, as well as from the forecasted cold weather, which will increase demand for heating oil and have the potential to affect upstream production”.

“Some downward pressure will come from the strengthening U.S. dollar,” the report added, noting that “the U.S. Dollar Index increased last week, finishing the week at 108.92 from the previous week of 108.13 and is at the highest level since October of 2022 and up from 100.42 on September 22, 2024”. 

To contact the author, email andreas.exarheas@rigzone.com