At the start of the year, sentiment in the oil market was overwhelmingly and deeply bearish. Most forecasts pointed to a large supply glut. Then the United States struck Venezuela, arrested its interim president to stand trial on US soil, and warned Iran, Mexico, and Colombia that they could be next. Protests erupted in Iran, Saudi Arabia and the UAE took divergent positions in Yemen, and at the same time Brent crude had already moved above $65 a barrel.

Geopolitics has long been an unpredictable factor in the oil market. There is always the possibility of supply disruptions among some major producers due to chronic political instability. Libya is often the most cited example, but as seen this year, Middle Eastern oil producers are not immune to disruption risks, even if they remain theoretical for now. And if actual market data show no supply surplus, prices could jump to much higher levels.

This week, Vortexa reported that volumes of crude oil sitting on tankers for at least seven days — indicating storage rather than transit from seller to buyer — fell to 120.9 million barrels in the week ending January 9, according to data cited by Barchart. This figure differs sharply from another number frequently cited by some observers: total crude volumes on all tankers regardless of purpose, which stood at about 1.3 billion barrels at the end of last year. That number has been cited as the highest since the 2020 pandemic lockdowns, implying that demand is being destroyed now as it was then.

But there are different reasons behind so-called demand destruction, and not all of them are driven by natural market forces. Bloomberg reported this week, for example, that Russian oil exports fell by about 450,000 barrels per day in the four weeks ended January 11. This decline was not the result of a natural drop in demand due to accelerating electrification in India and China, but rather the consequence of US sanctions that came into force in late November, alongside threats of additional tariffs on Indian imports unless refiners stop buying Russian oil.

However, there is an important nuance to this story. Of the 450,000-barrel-per-day decline over the four weeks to January 11, only about 30,000 barrels per day occurred in the period between Christmas and January 4, according to Bloomberg. The agency added that total Russian oil exports over the four weeks to January 11, at 3.42 million barrels per day, were actually above the 2025 average. In other words, demand remains largely robust, especially for discounted oil.

Speaking of discounted oil, China appears to have lost access to a significant share of cheap Venezuelan crude, although this may prove temporary. This development puts China’s active stockpiling last year in a new light, suggesting it was able to wait and observe developments in the South American country, whose oil industry President Trump said would be managed by the United States indefinitely. Attention has now shifted to Iran and its protests, which have been welcomed by both the European Union and President Trump. Oil price forecasts have already begun to be revised.

Analysts at Citi said this week, according to Reuters: “Protests in Iran pose risks of tightening global oil balances through potential near-term supply losses, but primarily via higher geopolitical risk premia.” This came just two days after Goldman Sachs revised its oil price forecasts for this year lower again, citing excess supply. However, the bank noted that the protests had not yet spread to Iran’s main oil-producing regions, adding that “current risks are skewed toward political and logistical frictions rather than direct disruptions, keeping the impact on Iranian crude supply and export flows limited.”

Earlier in the week, analysts at ANZ wrote in a note that protesters had called on Iran’s oil workers to join the demonstrations. The bank said the situation “puts at least 1.9 million barrels per day of oil exports at risk of disruption.”

Ole Hansen, Head of Commodity Strategy at Saxo Bank, wrote earlier this week that oil traders have adopted strongly bearish positions, warning that “this leaves the market vulnerable to a bullish reversal if the technical or fundamental backdrop improves.” Hansen cited a Goldman Sachs survey showing that institutional investors have become less enthusiastic about oil as further evidence of the prevailing bearish mood, but noted that geopolitical events could push prices higher in the short term.

In another geopolitically supportive development for prices, two tankers were attacked by a drone in the Black Sea, according to a Reuters report citing unnamed sources. The vessels were en route to a loading point operated by the Caspian Pipeline Consortium, which was targeted by Ukrainian drone attacks last year. No comments were made regarding responsibility for the attack, as the Ukrainian government declined to comment and the pipeline operator also remained silent. Still, the mere occurrence of the attack once again highlights the geopolitical risks that until recently had been largely overlooked in favor of expectations of a supply glut.

Bitcoin fell during Asian trading on Friday, trimming some of its recent gains after US lawmakers delayed a closely watched bill aimed at establishing a regulatory framework for digital assets.

The world’s largest cryptocurrency had climbed to around $96,000 earlier this week, but the recovery proved short-lived as sentiment toward cryptocurrency markets remained largely subdued.

Bitcoin slipped 0.8% to $95,192.0 by 09:43 US East Coast time (14:43 GMT). The world’s largest cryptocurrency was still trading up about 5% for the week, after a quiet start to the year.

United States delays cryptocurrency bill after Coinbase opposition

US lawmakers earlier this week postponed a key discussion on a planned regulatory framework for cryptocurrencies, after Coinbase Global, listed on Nasdaq under the ticker COIN, opposed the bill in its current form.

Coinbase Chief Executive Officer Brian Armstrong criticized the bill’s treatment of stablecoins, particularly provisions that would restrict the ability of crypto companies to offer yields or rewards on customers’ stablecoin holdings.

Optimism surrounding the bill had supported some of Bitcoin’s gains this week, as markets welcomed the regulatory clarity the proposed legislation could provide. However, crypto bulls expressed reservations about the bill’s stablecoin-related provisions.

Coinbase was among the largest donors during the 2024 US election cycle and is the largest cryptocurrency exchange in the United States. It is also widely seen as wielding significant influence over the shaping of cryptocurrency-related legislation.

Bitcoin heads for weekly gains after a quiet start to the year

Bitcoin was trading up about 5% this week, also benefiting from selective dip-buying following a subdued start to the new year.

Most of the cryptocurrency’s gains this week came after Strategy, the largest listed holder of Bitcoin, disclosed purchases of more than $1 billion worth of the cryptocurrency, bolstering hopes of improving institutional demand.

By contrast, retail investor demand remained under pressure, amid continued caution toward cryptocurrency markets. Bitcoin continued to trade at a discount on Coinbase compared with the global average, indicating that retail investor sentiment in the United States — the world’s largest crypto market — remains weak.

Cryptocurrency prices today: altcoins underperform despite weekly gains

Altcoins broadly moved lower alongside Bitcoin on Friday, although they were posting some weekly gains, supported by dip-buying and hopes of regulatory clarity in the United States.

Ether, the world’s second-largest cryptocurrency, fell 1.4% on the day, but was up about 5.7% on a weekly basis.

XRP declined 1.9% and was down around 1% for the week, while Solana was largely unchanged, recording weekly gains of about 2.7%.

Oil prices edged higher on Friday, as markets remained focused on supply risks despite easing expectations of a US military strike against Iran.

Brent crude rose by 79 cents, or 1.24%, to $64.55 a barrel by 11:51 GMT, heading for a fourth consecutive weekly gain. US West Texas Intermediate crude climbed by 74 cents, or 1.25%, to $59.93 a barrel.

Both benchmark crudes had hit multi-month highs earlier this week after protests erupted in Iran and US President Donald Trump signaled the possibility of military strikes.

Late on Thursday, Trump said that Tehran’s crackdown on protesters had begun to ease, reducing fears of potential military action that could disrupt oil supplies.

Analysts at Commerzbank said in a note: “Above all, there are concerns that Iran could impose a blockade on the Strait of Hormuz in the event of escalation — the passage through which around a quarter of the world’s seaborne oil supplies flow.”

They added: “If there are signs of a sustained de-escalation on this front, developments in Venezuela are likely to come back into focus, with oil that had been sanctioned or recently withheld gradually flowing into the global market.”

At the same time, analysts expect oil supply to increase this year, which could cap the geopolitical risk premium in prices.

Priyanka Sachdeva, an analyst at Phillip Nova, said: “Despite the persistent rhythm of geopolitical risks and macroeconomic speculation, the fundamental balance continues to point to ample supply.”

She added: “Unless we see a genuine rebound in Chinese demand or a tangible choke on actual barrel flows, oil prices are likely to remain range-bound, with Brent generally moving between $57 and $67 a barrel.”

The dollar was heading for a third consecutive weekly gain on Friday, after positive US economic data reduced expectations that the Federal Reserve would cut interest rates anytime soon.

The US currency rose overnight following an unexpected drop in weekly jobless claims, before stabilizing in Asian morning trading. At the same time, the Japanese yen remained at levels that keep the risk of intervention by Japanese authorities in currency markets to defend the currency in focus.

Federal funds futures pushed back expectations for the first interest rate cut to June, supported by improving employment data and as central bank policymakers voiced concerns about inflation.

Kyle Rodda, an analyst at Capital.com, wrote in a note: “The US dollar appears stronger at the start of the year. Weekly US jobless claims data, along with some manufacturing sector surveys, came in better than expected, which reduced the implied probabilities of an imminent interest rate cut by the Federal Reserve.”

The dollar index, which measures the US currency against a basket of currencies, was steady at 99.22 points, little changed on the day, but on track for weekly gains of about 0.1%. The euro was also steady at $1.1619.

The Japanese yen rose 0.4% against the dollar to 158.09 per dollar.

The US Department of Labor said on Thursday that initial jobless claims at the state level fell by 9,000 to 198,000 on a seasonally adjusted basis in the week ended January 10. Economists polled by Reuters had expected 215,000 claims in the latest week.

Chicago Federal Reserve President Austan Goolsbee said on Thursday that with ample evidence of labor market stability, the central bank should focus on bringing inflation down.

In the same vein, Kansas City Federal Reserve President Jeff Schmid described inflation as “too high,” while San Francisco Federal Reserve President Mary Daly said incoming US economic data appear encouraging.

Separately, Philip Lane, Chief Economist at the European Central Bank, said the ECB would not discuss any change in interest rates in the near term if the economy remains on its current path, but warned that new shocks — such as a potential deviation by the Federal Reserve from its mandate — could cloud the outlook.

The ECB has kept interest rates unchanged since ending a rapid easing cycle in June, and signaled last month that it is in no rush to adjust monetary policy again.

The Japanese yen has come under pressure amid expectations that Prime Minister Sanae Takaichi may have greater scope to pursue more expansionary fiscal policies, with early elections expected at the start of next month. However, warnings from Japanese policymakers that they are prepared to act against one-way moves in foreign exchange markets have provided the yen with temporary bouts of support.