Oil prices edged lower on Tuesday as traders balanced escalating geopolitical tensions against persistent bearish fundamentals. Market sentiment was shaped by signals from the United States that it may sell Venezuelan crude seized in recent weeks, alongside renewed attacks linked to the Russia–Ukraine conflict that raised concerns over potential supply disruptions.
Brent crude futures slipped 13 cents, or 0.2%, to $61.94 per barrel by 07:20 GMT. U.S. West Texas Intermediate (WTI) crude also eased 0.2%, falling 14 cents to $57.87 a barrel.
The pullback followed a strong session on Monday, when oil prices jumped more than 2%. Brent recorded its best daily gain in two months, while WTI posted its largest rise since mid-November.
Priyanka Sachdeva, senior market analyst at Phillip Nova, said oil markets are closing out 2025 in a subdued state. She described a continuing tug-of-war between weak underlying fundamentals and occasional geopolitical headlines that briefly lift prices.
According to Sachdeva, while geopolitical risks have sparked short-term rebounds throughout the year, the broader trend reflects sluggish demand and ample global supply. She added that structural supply pressures continue to outweigh temporary risk-driven rallies.
Supply outlook keeps pressure on prices
Markets remain cautious as investors weigh geopolitical uncertainty against forecasts pointing to sufficient oil supply in early 2026. This balance leaves prices vulnerable to sharper moves only if disruptions prove prolonged or widespread.
On Monday, Donald Trump said the United States could either retain or sell oil it has seized off the coast of Venezuela. The comments came amid Washington’s intensified pressure campaign on Caracas, which includes measures described as a blockade on sanctioned oil tankers entering and leaving the country.
Analysts at Barclays noted that even a complete halt in Venezuelan oil exports would likely leave global markets well supplied in the first half of 2026. However, the bank also warned that the global oil surplus is expected to narrow to around 700,000 barrels per day by the fourth quarter of 2026.
Barclays added that any extended supply disruption could further tighten the market, especially after recent inventory builds are drawn down.
Black Sea tensions add to uncertainty
Geopolitical risks also intensified in the Black Sea region, a key export corridor for both Russia and Ukraine. Russian forces struck Ukraine’s Black Sea port of Odesa late Monday, damaging port infrastructure and a vessel in the second attack on the area within 24 hours.
Ukrainian officials said a drone strike damaged two vessels and two piers in Russia’s Krasnodar region, triggering a fire in a nearby village. Ukraine has increasingly targeted Russia’s maritime logistics, including so-called shadow-fleet oil tankers used to circumvent sanctions imposed over the nearly four-year conflict.
Despite these developments, analysts say oil prices remain constrained by expectations of ample supply and muted demand growth, keeping the broader market outlook cautious.
