Oil prices rise as Venezuela, Russia supply fears grow
Oil prices finished higher on Monday as fresh geopolitical flashpoints revived fears of supply disruptions from two politically sensitive producers: Venezuela and Russia. What had been a relatively calm market was jolted by maritime incidents and military strikes that reminded traders how quickly energy flows can be threatened when sanctions and conflict collide.
Brent crude futures climbed $1.60, or 2.7%, to settle at $62.07 a barrel. U.S. West Texas Intermediate crude rose $1.49, or 2.6%, ending the session at $58.01 a barrel. The gains reflected not just immediate events, but a broader reassessment of geopolitical risk that many market participants had recently discounted.
The first trigger came near Venezuela’s coast. On Sunday, the U.S. Coast Guard attempted to intercept an oil tanker sailing in international waters that U.S. officials said was part of Venezuela’s sanctions-evasion network. It marked the third such operation this month and followed President Donald Trump’s announcement last week of a blockade targeting oil tankers entering or leaving Venezuela under U.S. sanctions.
While Venezuela accounts for only about 1% of global oil supply, the symbolism of the move carried weight. For months, traders had largely brushed off the risk of serious disruptions from Venezuelan exports, assuming enforcement would remain limited. That assumption is now being questioned.
“Market participants are reassessing the risk,” UBS analyst Giovanni Staunovo said, noting that the U.S. embargo could begin to bite more sharply if enforcement intensifies. Most Venezuelan crude is sold to China, making the situation especially sensitive in the context of broader U.S.–China tensions.
Beijing reacted sharply on Monday, condemning Washington’s actions after the U.S. intercepted a China-bound tanker off the Venezuelan coast over the weekend. China said the seizure of another country’s vessels amounted to a serious violation of international law, underscoring how energy security and geopolitics are increasingly intertwined.
At the same time, developments thousands of miles away added to market unease. Oil prices also found support from reports of Ukrainian drone attacks on Russian ships and port infrastructure along the Black Sea coast. According to regional authorities in Russia’s Krasnodar region, a Ukrainian strike damaged two vessels and two piers, and sparked a fire in a nearby village.
The Black Sea is a critical artery for Russian energy exports, including crude oil and refined products. Any disruption there raises concerns not only for Russia’s revenues, but for global supply chains that are already under strain from sanctions and rerouted trade flows.
Oil trading advisory firm Ritterbusch and Associates said the reports from the Black Sea injected a fresh layer of risk into the market. “The region is vital for Russian energy exports,” the firm noted, adding that even limited damage can have an outsized psychological impact on prices when tensions are high.
Despite Monday’s gains, analysts cautioned that the rally does not signal a dramatic shift in underlying fundamentals. Demand growth remains uneven, inventories are relatively comfortable, and holiday-thinned trading volumes tend to exaggerate price moves.
“We expect further consolidation this week amid reduced holiday volumes,” Ritterbusch said, pointing to a tug-of-war between weakening fundamentals and the need to maintain a geopolitical risk premium tied to Ukraine, Russia, and Venezuela.
Diplomatic efforts continue in the background, though their impact on oil markets remains uncertain. U.S. special envoy Steve Witkoff said on Sunday that talks held in Florida over the past three days between U.S., European, and Ukrainian officials focused on aligning positions to end Russia’s war in Ukraine. He described the discussions, as well as separate talks with Russian negotiators, as productive.
Still, traders remain skeptical that diplomacy will quickly ease tensions on the ground. For now, physical risks—ships intercepted, ports struck, exports threatened—are speaking louder than promises of progress.
Monday’s price action served as a reminder of how fragile the balance remains. Even relatively small producers like Venezuela can move markets when enforcement actions escalate, while attacks on infrastructure in key export corridors like the Black Sea can rapidly revive fears of wider disruption.
As the year draws to a close, oil markets are once again being shaped less by spreadsheets and forecasts, and more by patrol boats, drones, and diplomatic brinkmanship—factors that keep volatility close to the surface, even when demand appears steady.