Oil prices declined on Monday as markets weighed supply disruptions caused by rising U.S.-Venezuelan tensions against growing concerns over oversupply and the potential impact of a Russia-Ukraine peace agreement.
Brent crude futures fell 47 cents, or 0.77%, to $60.65 a barrel by 10:46 a.m. EST (15:46 GMT). U.S. West Texas Intermediate (WTI) crude dropped 59 cents, or 1.03%, to $56.85 a barrel.
Both benchmarks lost more than 4% last week, pressured by expectations that global oil markets could face a surplus in 2026.
Venezuela supply disruptions limit losses
Venezuela’s oil exports have dropped sharply after the United States seized a tanker last week and introduced new sanctions targeting shipping companies and vessels involved in transporting Venezuelan crude. The decline was confirmed by shipping data, documents, and maritime sources.
Market participants are closely tracking developments after Reuters reported that the U.S. plans to intercept additional vessels carrying Venezuelan oil. The move would further tighten pressure on Venezuelan President Nicolas Maduro and raise uncertainty around near-term supply.
“The steady grind lower in oil prices last week could have been even more pronounced if it were not for the escalation by the United States regarding Venezuela,” said John Evans, analyst at PVM.
However, the impact of the supply disruption has been partly offset by large volumes of oil already en route to China, Venezuela’s largest buyer. Abundant global supply and softer demand conditions are also helping cushion the market reaction.
Geopolitical risks remain in focus
Geopolitical developments continue to influence oil markets. Ukrainian President Volodymyr Zelenskiy said he would be willing to abandon Ukraine’s bid to join NATO during talks with U.S. envoys in Berlin on Sunday. Discussions are set to continue on Monday.
U.S. envoy Steve Witkoff stated that “significant progress was made,” though no further details were released.
Any potential peace deal could eventually lead to an increase in Russian oil supply, much of which remains restricted by Western sanctions.
“Geopolitical risks remain elevated, driven by U.S.-led diplomacy on Ukraine, ongoing attacks on Black Sea shipping, and renewed concerns over possible U.S. military action involving Venezuela,” Aegis Hedging said in a note.
Russia carried out attacks on two Ukrainian ports on Friday, damaging three Turkish-owned ships, further adding to regional instability.
Surplus expectations pressure prices
Expectations of rising supply continue to weigh on oil prices. J.P. Morgan Commodities Research said in a note that oil surpluses forecast for 2025 are expected to widen further into 2026 and 2027.
The bank projects that global oil supply will grow at roughly three times the pace of demand through 2026, reinforcing concerns about prolonged oversupply in the market.
