Oil Prices Edge Higher Amid Supply Tensions, Market Surplus Warnings, and Geopolitical Uncertainty

Global oil prices rose around 1% on Friday, supported by near-term supply tightness and ongoing geopolitical tensions, even as analysts flagged concerns over a potential surplus later in the year.

Brent crude futures climbed 76 cents, or 1.11%, to $69.40 a barrel by 2:53 p.m. Saudi time, while U.S. West Texas Intermediate (WTI) crude rose 82 cents, or 1.23%, to $67.39 a barrel. Brent is now set for a 1.6% weekly gain, while WTI is tracking a 0.6% increase from last Friday’s close.

The International Energy Agency (IEA), in its latest assessment, noted that summer travel and power-generation needs are keeping oil demand strong, despite warning that global supply could soon outpace demand. The agency raised its 2025 supply growth forecast while trimming its demand outlook, suggesting the market could tip into surplus.

Despite that longer-term warning, analysts say short-term conditions remain tight. “Civilians, be they in the air or on the road, are showing a healthy willingness to travel,” said PVM analyst John Evans in a note. Reflecting that sentiment, front-month September Brent contracts were trading at a $1.11 premium over October contracts, indicating prompt supply tightness.

Ongoing support for prices also came from Russia’s commitment to compensate for exceeding its OPEC+ production quota earlier this year. Deputy Prime Minister Alexander Novak confirmed that Russia would make up for the overproduction between August and September.

However, the market remains volatile amid shifting global trade dynamics. Both Brent and WTI fell by more than 2% on Thursday as investors reacted to concerns over the impact of former U.S. President Donald Trump’s evolving tariff strategy. Trump recently announced a new round of tariff measures, sparking fears of a broader slowdown in global economic growth that could weigh on energy demand.

Adding to market unease is speculation that Trump may unveil further sanctions on Russia next week, following his public criticism of President Vladimir Putin over continued aggression in Ukraine.

Meanwhile, the European Commission is expected to propose a new floating price cap on Russian oil exports as part of its latest sanctions package. In response, Russia has indicated confidence in its ability to withstand such measures, citing “good experience” in navigating past restrictions.

Looking ahead, the Organization of the Petroleum Exporting Countries (OPEC) has revised down its forecasts for global oil demand between 2026 and 2029, citing weakening demand trends in China.

Despite long-term concerns, analysts believe near-term pricing will remain sensitive to supply signals, travel demand, and geopolitical developments.