Oil Heads for Biggest Weekly Gain since October on Rising Geopolitical Risks

Global oil prices are on track to post their strongest weekly gains since late October, buoyed by escalating geopolitical tensions and renewed U.S. pressure on Venezuelan crude exports, even as markets remain wary of an impending global supply surplus next year.

U.S. benchmark West Texas Intermediate (WTI) crude stabilized above $58 a barrel, notching weekly gains of more than 3%, its largest advance in over a month. The rally reflects growing concern among traders that geopolitical disruptions could temporarily outweigh bearish fundamentals tied to oversupply.

Latest Oil Prices:

WTI Crude $58.50 +0.15 +0.26%

Brent Crude $62.39 +0.15 +0.24%

Murban Crude $62.80 -0.24 -0.38%

Louisiana Light $60.88 +1.48 +2.49%

Bonny Light $78.62 -2.30 -2.84%

Mars US $70.06 -0.92 -1.30%

Gasoline $1.753 +0.006 +0.32%

Natural Gas $4.285 +0.043 +1.01%

At the center of the latest move is a partial U.S. blockade of Venezuelan oil shipments, alongside fresh military action by Washington in Nigeria, a key oil-producing nation and member of OPEC.

According to sources familiar with the matter, the White House has instructed U.S. military leaders to prioritize efforts over the next two months to isolate Venezuelan crude exports, opting for enforcement and interdiction strategies rather than direct military confrontation.

One oil tanker subject to U.S. sanctions recently altered its course while being tracked by American forces, signaling a renewed crackdown on Caracas’ oil trade. The move marks a significant escalation in Washington’s long-running campaign to restrict Venezuela’s access to global energy markets.

Despite these actions, analysts caution that the broader oil market remains under pressure. WTI crude is still on course for its largest annual decline since 2020, down nearly 18% year-to-date, driven by expectations of a global supply glut in 2024 as production rises both within and outside the OPEC+ alliance.

Adding to market unease, U.S. President Donald Trump announced that American forces had carried out what he described as a “powerful and lethal strike” against ISIS-linked militants in northwestern Nigeria. While details remain scarce, the announcement immediately injected a geopolitical risk premium into oil prices.

Nigeria, Africa’s largest oil producer, pumped approximately 1.5 million barrels per day in November, according to OPEC data. Any threat to stability in the region raises concerns over potential disruptions to supply, particularly at a time when markets are already sensitive to geopolitical flashpoints.

U.S. Defense Secretary Pete Hegseth warned that further action could follow if militant attacks continue, particularly against civilian and religious targets. The White House has declined to provide additional details regarding the scope or targets of the operation.

Beyond Africa and Latin America, tensions in Eastern Europe have also contributed to oil’s rebound. Ukrainian President Volodymyr Zelenskyy confirmed talks with U.S. envoys aimed at ending the war with Russia, even as Kyiv reportedly launched an attack on the Novoshakhtinsk refinery in Russia’s southern Rostov region.

Such developments underscore the fragile geopolitical backdrop underpinning oil markets, where even modest disruptions or threats can spark sharp price reactions despite ample supply forecasts.

While geopolitical risks are providing short-term support, most major oil traders and analysts continue to forecast a global oversupply next year, driven by rising output from OPEC+ members and non-OPEC producers alike.

For now, however, traders appear willing to look past surplus concerns, focusing instead on near-term risks to supply chains in an increasingly volatile global landscape.

Whether the current rally can be sustained will depend largely on how geopolitical tensions evolve, and whether supply disruptions materialize beyond headlines.