Oil Prices Climb as U.S.-Venezuela Tensions Threaten Supply
Oil prices rebounded on Monday, recovering part of the 4% decline experienced last week. The increase was driven by concerns over potential supply disruptions due to escalating tensions between the U.S. and Venezuela, which overshadowed ongoing oversupply worries and uncertainties surrounding a potential Russia-Ukraine
Oil prices rebounded on Monday, recovering part of the 4% decline experienced last week. The increase was driven by concerns over potential supply disruptions due to escalating tensions between the U.S. and Venezuela, which overshadowed ongoing oversupply worries and uncertainties surrounding a potential Russia-Ukraine peace agreement. Brent crude futures rose by 25 cents, or 0.4%, reaching $61.37 per barrel at 0055 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude increased by 23 cents, or 0.4%, to $57.67 per barrel.
Tsuyoshi Ueno, a senior economist at NLI Research Institute, said tensions between Venezuela and the U.S. are rising as prospects for Russia-Ukraine peace talks fluctuate. Markets stay uncertain, oversupply concerns persist, and WTI prices may fall below $55 early next year if geopolitical risks don't increase significantly.
Russia-Ukraine negotiations continue, with Ukrainian President Zelenskiy offering to drop NATO ambitions in five hours of talks with U.S. reps in Berlin. Discussions are expected to go into Monday. U.S. envoy Steve Witkoff said, "a lot of progress was made," but provided no details.
On the military front, Ukraine reportedly targeted a major Russian oil refinery in Yaroslavl, northeast of Moscow, leading to a suspension of its output. Additionally, Russian state oil revenues are projected to decline nearly by half in December, dropping to approximately 410 billion roubles ($5.12 billion), due to lower crude prices and a stronger rouble, according to Reuters.
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A potential peace deal could boost Russian oil exports, currently under Western sanctions. Meanwhile, opposition leader Maria Corina Machado announced political change after secretly leaving Venezuela to accept the Nobel Peace Prize, amid ongoing shocks from the U.S. seizure of an oil tanker last week. Venezuelan oil exports have sharply declined due to sanctions on shipping. U.S. energy firms reduced oil and gas rigs for the second time in three weeks, according to Baker Hughes. Despite these changes, oil markets remain sensitive to geopolitical events and supply disruptions, affecting prices.
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