Crude oil prices edged higher as traders weighed fears of a global supply glut against rising geopolitical tensions involving Venezuela, Russia, and Iran. Despite concerns over oversupply, escalating political risks helped support prices in early trade.
Oil Prices Hold Firm
West Texas Intermediate (WTI) crude traded above $58 per barrel, while Brent crude hovered near $62 per barrel, after gaining 2.1 percent in the previous session. Prices were supported by supply disruptions and heightened geopolitical uncertainty.
Venezuela Supply Disruptions Add Support
Venezuela has begun shutting oil wells in regions that hold some of the world’s largest crude reserves. A partial US blockade has disrupted exports, causing storage tanks within the country to reach capacity. These supply challenges have added upward pressure on global oil prices.
US President Donald Trump also claimed that the United States had carried out an attack on a drug facility in Venezuela, further escalating tensions in the region.
Russia and Iran Tensions Raise Market Uncertainty
Geopolitical risks intensified after Russian President Vladimir Putin stated he would revise his negotiating position following alleged drone attacks on his residence, complicating diplomatic efforts to end the Ukraine conflict.
Meanwhile, President Trump warned that the US would strike Iran again if it attempts to rebuild its nuclear program. These developments have increased uncertainty in energy markets, supporting oil prices despite weak fundamentals.
Oversupply Concerns Continue to Linger
On the supply side, crude markets remain under pressure as OPEC+ increased output in an effort to regain market share. Analysts continue to warn that global production could exceed demand, keeping oil prices vulnerable.
According to data from Vortexa Ltd., the volume of crude oil stored on tankers that remained stationary for at least seven days rose 15 percent last week, signaling excess supply. Global floating storage reached its highest level since 2020 in November.
US Oil Inventories Rise Sharply
US government data showed that crude inventories at the key Cushing, Oklahoma storage hub recorded their largest weekly increase since late October for the period ending December 19, adding to concerns about surplus supplies.
Analyst View
“Geopolitical disruptions have largely diluted, if not overshadowed, the issue of oversupply in the market,” said Gao Jian, analyst at Qisheng Futures Co. in Shandong.
“Unless these conflicts are resolved, market volatility and price support are likely to persist. However, a deepening supply glut could eventually push prices lower,” he added.
Outlook
While geopolitical tensions are currently providing support to crude prices, analysts warn that persistent oversupply risks could cap gains. Oil markets are expected to remain volatile in the near term as traders track developments in global politics, OPEC+ production levels, and inventory data.
ALSO SEE