By Giulia Petroni
Here's a look at what happened in oil markets in the week of Jan. 26-30 and what the focus will be in the days to come.
OVERVIEW: Oil prices are on track for weekly gains of more than 6%, with Brent crude trading back above $70 a barrel as traders fear the U.S. could carry out strikes against Iran. A buildup of U.S. military forces in the region this week has heightened concerns that an escalation could occur soon, potentially disrupting global supply.
MACRO: The spotlight has been on the Federal Reserve this week, with President Trump earlier on Friday announcing he picked Kevin Warsh to lead the U.S. central bank. Markets perceive Warsh as a more hawkish candidate than, for example, Kevin Hassett. However, "we would be cautious about reading too much into this," analysts at Commerzbank said. "The U.S. president has made it sufficiently clear that he wants to see significantly lower interest rates."
On Wednesday, the Fed held interest rates steady and signaled little urgency to resume cuts.
The latest U.S. data showed prices charged by U.S. producers for goods and services rose more than expected in December. The producer-price index increased 0.5% last month, compared to expectations of a 0.3% increase and a 0.2% gain in November. For the full year 2025, wholesale prices climbed 3% overall.
Meanwhile, a weaker U.S. dollar has made commodities cheaper for holders of other currencies. However, because oil demand is relatively price-inelastic, the dollar's impact on prices is seen as limited in this case, according to some market watchers.
GEOPOLITICAL RISKS: Concerns over potential U.S. action against Tehran have kept the geopolitical risk premium higher this week, with traders saying the biggest concerns involve potential U.S. strikes against Iranian oil infrastructure or disruption to shipping through the Strait of Hormuz.
"An escalation between the U.S. and Iran puts around 1.5 million barrels a day of Iranian oil exports at risk," ING analysts said. "But clearly, any escalation would also raise concerns over broader Persian Gulf oil flows through the Strait of Hormuz."
Prices have also been boosted by supply disruptions elsewhere, including a significant loss of crude exports from Kazakhstan due to damage at the Caspian Pipeline Consortium. This has supported the prompt Brent timespread--the price difference between the front-month contract and futures for delivery in later months--though flows are expected to recover in the coming months, according to market watchers.
SUPPLY AND DEMAND: A massive winter storm sweeping the U.S. has supported demand for heating fuels and disrupted production on the Gulf Coast and elsewhere, boosting oil prices this week. The overall fundamentals outlook, however, remains bearish due to growing oversupply.
"The oil market remains well supplied, although the oversupply is not quite as high as initially assumed thanks to supply disruptions and slightly stronger demand," said Barbara Lambrecht from Commerzbank. "Inventory data next week should provide insight into the extent of the disruptions in the U.S."
The latest EIA data showed crude stocks fell by 2.3 million barrels last week, against expectations of a 1-million-barrel build. Gasoline inventories were up by 223,000 barrels, while distillate stocks rose by 329,000 barrels.
WHAT'S AHEAD: Key members of the OPEC+ alliance are set to virtually meet on Sunday, with no changes to production policy in sight for now. On the economic calendar, investors will focus next week on ADP employment figures, jobless claims, and consumer sentiment data.
Write to Giulia Petroni at giulia.petroni@wsj.com
(END) Dow Jones Newswires
January 30, 2026 12:21 ET (17:21 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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