Speculators Buy Brent, Driving Market Growth – ING

Oil Market Continues Gains, But Pauses to Assess Credit Downgrade and Geopolitical Uncertainty

The oil market has enjoyed a second consecutive week of gains, primarily driven by easing tariffs between the U.S. and China. However, the market has now paused to reflect on the potential impact of the U.S. credit downgrade by Moody’s Investors Service. Analysts are also closely monitoring ongoing uncertainties surrounding Iranian nuclear talks and the scheduled phone call between U.S. President Donald Trump and Russian President Vladimir Putin, particularly regarding the Russia-Ukraine crisis.

While tariff relief has improved market sentiment, speculators have also increased their positions in Brent crude, boosting the market. The most recent data shows a significant rise in long positions in ICE Brent. Despite this, the market remains cautious as it awaits further clarity on the geopolitical situation, especially regarding the potential lifting of sanctions on Russia. Even if a peace deal is reached, it is expected that any increase in oil supply from Russia would be modest, as Russia has already successfully rerouted oil flows to China and India to bypass Western sanctions.

As the market watches the developments, attention remains on the broader global context and the upcoming geopolitical talks, which could influence oil prices in the short term.