New york: Oil prices fell for the second week, as concerns about oversupply outweighed geopolitical risks threatening supplies. West Texas Intermediate crude rose 0.9% to settle above $56 a barrel on Friday evening. However, the US benchmark is still down more than 1% for the week, hitting its lowest level in nearly five years. Prices received some support after Ukraine attacked a Russian shadow fleet oil tanker in the Mediterranean, in the latest escalation of attacks on ships supporting Russian oil exports.

According to National Iraqi News Agency, despite these risks, virtually all major traders worldwide anticipate a supply glut early next year. Trafigura, one of the world’s largest commodity trading firms, predicts Brent crude will trade in the $50s until mid-2026 before recovering later in the year. Markets are bracing for this scenario, with short positions reaching an all-time high this week while long positions declined.

Oil prices have lost nearly a fifth of their value this year as OPEC+ resumed p
umping crude at a faster-than-expected pace, along with increased production in other regions, while demand remained weak. Geopolitical risks, particularly those related to Russian and Venezuelan supplies, have limited some of the declines, but a peace agreement ending Russia’s war in Ukraine could push prices down further by reducing the risk of supply disruptions.

Trading volumes appear thin as the Christmas and New Year holidays approach, which could lead to volatile price movements. The positioning in anticipation of an unusual downturn may have also contributed to the slight price increase on Friday, as traders sought to cover their short positions, thus amplifying price movements.