Oil prices fell about 1%, but remains on track for the largest weekly increase since October 2023 on the back of favorable US GDP data, expectations of an acceleration in China's economic growth, as well as ongoing geopolitical tensions in the Middle East. Prices were also supported by a sharp reduction in oil reserves in the United States last week.
Since the beginning of this week, Brent crude has risen by 4.15%, while the price of WTI oil has jumped by 4.45%. Both were on track for a second straight weekly rise and their biggest weekly increase since the week ending October 13.
Today's price correction comes on the back of prospects that oil supply disruptions in the Red Sea could ease as Chinese officials asked Iran to help curb attacks on ships, otherwise they risk damaging business relations with Beijing. However, analysts recalled that previous interventions by U.S. and UK forces in the Red Sea did not prevent attacks, which prompted many ship owners to avoid the Red Sea in favor of longer routes.
In January, oil prices rose by more than 7%, offsetting the December drop. However, many traders remain cautious, given the prospects for stable supply from non-OPEC producers, as well as slowing demand growth from major importers, including India.