HG MARKETS:

West Texas Intermediate (WTI) crude oil futures edged closer to the $68 per barrel mark on Friday, extending gains from the previous session where prices rose over 1%. The oil market is currently navigating a complex landscape, balancing significant supply disruptions against persistent uncertainty surrounding U.S. trade policy.
One of the primary factors driving the price increase is the recent drone attacks in Iraq’s Kurdistan region, which have temporarily cut crude oil output by as much as 150,000 barrels per day (bpd). This sudden supply disruption has added pressure to a market already on edge due to broader regional instability. Ongoing Israeli airstrikes in Syria have further amplified fears of conflict-driven supply shocks across the Middle East, a key hub for global oil production and exports.
Seasonal factors have also contributed to upward pressure on prices. July typically sees heightened travel demand due to the summer holiday season in the Northern Hemisphere. According to recent surveys, global oil consumption has averaged 105.2 million bpd so far this month, reflecting strong demand patterns. The demand-side support was further reinforced by a larger-than-expected draw in U.S. crude oil inventories last week, signaling robust domestic consumption.
Despite these bullish signals, gains in oil prices have been tempered by growing unease surrounding U.S. tariff policy. Markets remain uncertain about whether new tariffs will be introduced or lifted, with decisions potentially delayed until after August 1. This policy ambiguity is creating headwinds for risk assets, including commodities like oil, which are highly sensitive to global trade flows and economic outlooks.
Adding to the complexity is the prospect of major oil-producing nations rolling back previously agreed production cuts. Should producers like Saudi Arabia and Russia decide to increase output, this could counteract recent supply disruptions and weigh on prices.
Looking ahead, oil prices remain vulnerable to geopolitical developments. While the recent U.S. inventory data and Kurdistan supply outage offer short-term support, WTI is still on track for a weekly loss of over 1%. This would mark the first weekly decline in three weeks. The downside pressure was partly triggered by President Trump’s recent ultimatum to Russia—giving Moscow 50 days to agree to a ceasefire. The move reduced the immediate risk of sanctions on Russian oil, thereby easing fears of further global supply disruptions.
In summary, the oil market remains caught between conflicting forces, with near-term supply risks and seasonal demand propping up prices, while macroeconomic and policy uncertainty continues to cap significant upside potential.