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Oil prices dipped slightly on Friday but remained on track for a weekly gain, driven by ongoing supply risks in the Middle East amid heightened geopolitical tensions. Despite a 0.3% decline in Brent crude to $81.20 per barrel, the week saw a 2.5% rise due to concerns over potential disruptions in OPEC+ production and Israeli-Palestinian conflicts. Traders balanced these risks against softer U.S. economic data and the Federal Reserve's dovish signals, which limited downward pressure on prices.
For markets, the mixed signals highlight the delicate equilibrium between supply-side uncertainties and macroeconomic factors. Traders are closely monitoring OPEC+ compliance with output cuts and potential U.S. shale production responses. The Middle East's geopolitical volatility remains a key wildcard, with any escalation likely to trigger sharp price swings. Additionally, the U.S. nonfarm payrolls report next week could influence broader risk appetite and energy demand expectations.
Looking ahead, Gulf investors should watch for developments in the Red Sea shipping corridor and OPEC+ policy adjustments. The U.S. Federal Reserve's rate decisions and global economic growth forecasts will also shape oil's trajectory. With the market pricing in a 60% probability of a Fed rate cut in Q2, crude could see renewed upward momentum if geopolitical risks persist alongside accommodative monetary policy.
