Oil Prices Steady Amid IEA Forecast Downgrade, Market Tightness, and Geopolitical Concerns

Oil prices held steady on Friday as traders weighed a downward revision of global demand growth by the International Energy Agency (IEA) against tight short-term supply and ongoing geopolitical tensions, including the threat of new sanctions on Russia and rising tariff uncertainty.

Brent crude futures rose by 19 cents, or 0.28%, to $68.83 per barrel as of 0807 GMT, while U.S. West Texas Intermediate (WTI) crude edged up 25 cents, or 0.38%, to $66.82. Both benchmarks were broadly flat for the week, with Brent on track for a 0.8% weekly gain and WTI poised for a 0.3% loss due to the U.S. market closure on July 4.

The IEA’s latest report on Friday showed an upward revision in global supply expectations for 2025 but trimmed its forecast for demand growth, citing a more subdued economic outlook. Nevertheless, the agency noted that summer travel and increased power generation are supporting near-term market tightness, with peak seasonal refinery activity helping to stabilize prices.

“Despite the looming threat of an oil glut later in the year, there is no current catalyst strong enough to drag prices back to the lows seen in April and May,” said PVM analyst John Evans. “Travel demand — both in the skies and on the roads — remains robust.”

Evidence of strong near-term demand includes Saudi Arabia’s plans to ship approximately 51 million barrels of crude to China in August, the highest monthly volume in over two years.

However, longer-term projections remain more cautious. The Organization of the Petroleum Exporting Countries (OPEC) revised down its global oil demand forecasts for 2026 to 2029, citing slower growth from China, according to its 2025 World Oil Outlook released Thursday.

Thursday’s trading session saw both crude benchmarks fall more than 2% amid investor concern over potential global economic fallout from former President Donald Trump’s evolving tariff strategy. Markets partially rebounded on Friday following Trump’s announcement that he will make a “major” statement on Russia next week — a move analysts fear could lead to additional sanctions.

Tensions with Russia remain high, with the European Commission expected to introduce a floating oil price cap as part of a new sanctions package, while Trump continues to voice frustration over Moscow’s military campaign in Ukraine.

Despite the uncertain macroeconomic landscape, front-month September Brent contracts traded at a $1.11 premium to October futures on Friday, a signal that tightness in the prompt market persists even as longer-term concerns mount.