Oil Prices Close Higher Amid Focus on Russia-Ukraine Conflict

Oil prices climbed on Friday, gaining nearly 1% to hit a two-week high as the intensification of the war in Ukraine this week heightened the market’s geopolitical risk premium.

Brent crude for January delivery rose 1.27%, closing at $75.17 per barrel. Meanwhile, West Texas Intermediate (WTI) for the same month increased by 1.63%, reaching $71.24 per barrel.

The gains came as concerns over risks linked to the Russia-Ukraine conflict overshadowed worries about supply-demand dynamics and the strengthening U.S. dollar.

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Russia-NATO Tensions Fuel Market Nervousness

The Kremlin stated on Friday that the United States had “understood” President Vladimir Putin’s message following his Thursday speech, in which he highlighted the launch of a new missile capable of carrying nuclear warheads.

This launch followed two strikes by Ukraine on Russian territory using U.S.-supplied ATACMS missiles and British Storm Shadow missiles. In response, Putin threatened to target nations supplying arms to Kyiv.

The market is increasingly factoring in the potential for crude supply disruptions, once again pricing in the geopolitical risk premium associated with this war.

Broader Market Pressures Remain
Despite the price rebound, crude prices remain capped by forecasts of surplus supply in 2025 and by a monthly drop in oil demand from China.