Oil Rises Again, Risk Premium Returns to Market
Oil prices rallied again on Friday (January 23rd) after the market reinstated a geopolitical risk premium following US President Donald Trump's statement about an "armor" heading toward Iran. In the latest trading, the March WTI contract was trading in the range of $60–$61/barrel, while March Brent was around $66/barrel.
The main driver came from supply concerns. Reuters reported that Trump said an armada—including an aircraft carrier and several destroyers—would arrive in the Middle East within days, prompting market participants to reconsider the risk of supply disruptions from the Gulf region.
However, this rally was not smooth sailing. The day before, prices had weakened when tensions in Greenland eased, and the market was also weighed down by US inventory data. The EIA report showed US commercial oil stocks rose by 3.6 million barrels, higher than expected, adding to signs that supplies remain tight.
Meanwhile, the shadow of oversupply continues to limit the rally. The IEA estimates that global inventories still have the potential to increase this year because supply exceeds demand—meaning that geopolitical headlines could push prices up quickly, but supply fundamentals could restrain further increases.
Source: Newsmaker.id
