By Antonio Di Giacomo, Senior Market Analyst at XS.com
Crude oil prices started the week on an upward move, reflecting increased risk aversion within energy markets. Brent crude rose more than 2.20% to $62.16 per
barrel, while West Texas Intermediate (WTI) climbed by a similar margin to around $58.13. The rebound came as geopolitical factors once again took center stage,
temporarily displacing concerns about weakening demand.
One of the primary triggers was the pursuit of an oil tanker near Venezuela by the U.S. Coast Guard, following the tightening of sanctions announced last week by
Donald Trump. Although Venezuelan production accounts for roughly 1% of global supply, the market began to price in the risk of additional disruptions to its exports, particularly amid stricter enforcement of sanctions.
This episode highlighted the market’s sensitivity to events that, even with limited impact on volume, can alter expectations about supply stability. In an environment of tight inventories and limited room for maneuver, even marginal disruptions tend to be amplified through a higher geopolitical risk premium.
Adding to this, recent Ukrainian drone attacks on port infrastructure and Russian vessels in the Black Sea, a key region for Russia’s energy exports, reinforced
perceptions of vulnerability along one of the most important routes for crude and refined product trade. These developments kept market attention firmly focused on
the Russia–Ukraine conflict.
From a market perspective, several firms anticipate a week of consolidation, marked by lower volumes due to the holiday period. In this context, weaker crude oil
fundamentals linked to moderate global demand are competing with the need to maintain an elevated risk premium amid persistent geopolitical flashpoints.
On the diplomatic front, U.S. special envoy Steve Witkoff said recent talks among the United States, Europe, and Ukraine have been productive in aligning positions
toward a possible end to the conflict. However, from Moscow, President Vladimir Putin’s top foreign policy adviser stated that the changes proposed by Europe and
Ukraine have not materially improved the prospects for peace, keeping uncertainty high.
This contrast between partial diplomatic progress and entrenched positions reinforces volatility in oil prices, as the market continues to react more to short-term
headlines and events than to structural changes in supply and demand.
In conclusion, the recent rebound in crude oil underscores that, even in an environment of weaker fundamentals, geopolitics remains a key driver of price
formation. As long as tensions persist in critical regions and uncertainty over sanctions and armed conflicts remains, the risk premium will continue to provide
meaningful support for crude prices, limiting deeper declines and keeping markets in a heightened state of caution.
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