Oil Prices Dip Amid Demand Concerns, But Weekly Gains Hold on Sanction Bets

Oil prices edged lower in Asian trading on Friday as traders weighed weak global economic signals against the potential for tighter supply. Brent crude futures for August slipped 0.1% to $65.27 per barrel, while West Texas Intermediate fell 0.1% to $62.39 by 01:05 GMT.

Despite Friday’s dip, both Brent and WTI are on track for their first weekly gain in three weeks, rising between 2% and 4.5%. This rebound is driven by expectations of tighter global supply due to possible new U.S. sanctions on Iran and Russia, and OPEC+ sticking to its modest supply increase for July.

Geopolitical tensions also supported oil prices. Russia escalated military strikes on Ukraine in apparent retaliation for recent attacks on its infrastructure. The renewed violence follows a call between U.S. President Donald Trump and Russian President Vladimir Putin, complicating ceasefire efforts and increasing the likelihood of further Western sanctions on Russian oil exports. Lawmakers in Washington are reportedly pushing to expand sanctions to major Russian oil buyers, including China and India.

However, bearish demand signals are capping further gains. Soft economic data from the U.S. and China—two of the world’s largest oil consumers—has fueled concerns of slowing growth. An ongoing tariff exchange between the two countries adds further uncertainty, despite a recent call between Trump and Chinese President Xi Jinping that hinted at revived trade negotiations. Meanwhile, large builds in U.S. oil product inventories have also pressured sentiment.

While tighter supply prospects lend support, the market remains cautious as economic headwinds and geopolitical risks continue to cloud the outlook for global oil demand.