London (TDI): Oil prices rose on Monday, driven by the market impact of escalating US-Venezuela tensions, which are raising concerns about immediate supply disruptions. The primary reason behind the rise is the intensified pressure from the United States on Venezuela. Following the seizure of the tanker and imposition of fresh sanctions on shipping companies dealing with the Latin American producer, Venezuela’s oil exports have already seen a sharp decrease.
The geopolitical factor was strong enough to temporarily overshadow the persistent worries, as Tsuyoshi Ueno, a senior economist at NLI Research Institute, mentioned that “Peace talks between Russia and Ukraine have swung between optimism and caution, while tensions between Venezuela and the US are escalating, raising concerns about potential supply disruptions.”
Brent crude futures saw an increase of 0.25% settling at $61.27 a barrel, while the US benchmark West Texas Intermediate (WTI) also gained 0.26% reaching 57.59 a barrel. This slight rise followed a turbulent prior week where both contracts slid by over 4%. That oil surpluses are set to widen into 2026 and 2027, with global supply expanding 3 times the rate of demand growth.
Market monitors are now tracking developments closely as Reuters reports indicate the US plans to intercept even more ships carrying Venezuelan oil to heighten pressure on President Maduro. Tsuyoshi Ueno also suggested that “with markets lacking clear direction, oversupply concerns remain strong and unless geopolitical risks escalate sharply, WTI could fall below $55 early next year.”
Furthermore, the Russia-Ukraine conflict creates a complicated situation for the global oil supply. The potential peace deal signaled by Ukrainian President Volodymyr Zelensky offers to drop NATO aspirations. If peace is achieved and sanctions on Moscow are eventually removed, a large amount of currently restricted Russian oil could enter the market. However, the country’s oil and gas revenue is projected to fall by nearly half in December, primarily due to lower prices, creating financial pressure that could motivate policy changes.
