Oil prices steadied near $59 per barrel on Tuesday, extending the previous session’s gains as geopolitical tensions and fresh supply disruptions reinforced a market struggling to find balance ahead of what is expected to be a year of potential oversupply. With traders weighing the impact of Ukrainian strikes on key Russian export infrastructure and rising tensions between the U.S. and Venezuela, crude markets are attempting to reprice risk despite broader macro signals that continue to point toward weakening demand.

Supply Threats Reignite a Risk Premium Amid Fragile Fundamentals

West Texas Intermediate held around $59.30 after rising more than 1% on Monday, supported by a combination of supply-side uncertainty and defensive positioning. Ukrainian attacks over the weekend inflicted significant damage on one of the three loading moorings at the Caspian Pipeline Consortium, the conduit responsible for transporting the majority of Kazakhstan’s crude exports through Russia’s Black Sea coastline. The halt in operations underscored how vulnerable export routes remain as the conflict enters another year, disrupting flows that have averaged roughly 1.6 million barrels per day in 2025.

While the interruption is unlikely to trigger an immediate global shortage, it adds to the perception that geopolitical risk is once again underpriced—a trend that has emerged repeatedly throughout the year. With traders heavily short oil heading into December, even modest supply shocks can amplify upward price pressure.

U.S.–Venezuela Tensions Add a Second Layer of Uncertainty

Compounding the supply concerns is a deepening rift between Washington and Caracas. President Donald Trump warned that Venezuelan airspace should be considered closed following military escalations and new U.S. deployments in the region. The prospect of additional sanctions or strategic actions introduces another layer of uncertainty for global flows, particularly as Venezuela has been working to rebuild output and re-enter formal energy markets after years of decline.

Although Venezuela’s production volumes remain well below historical highs, any disruption to incremental growth could influence the medium-term supply outlook, especially if tensions expand to affect tanker movements or foreign involvement in energy infrastructure.

OPEC+ Holds Firm as Markets Brace for 2026 Oversupply

Against this geopolitical backdrop, OPEC+ reaffirmed its plan to maintain steady production levels through the first quarter of 2026. The decision reflects a delicate balancing act: the group is attempting to prevent further price erosion amid uneven consumption trends while avoiding aggressive cuts that could cede market share to non-OPEC producers, particularly in the U.S.

Still, the cartel faces a challenging path. Crude prices have fallen more than 15% year-over-year, and futures markets continue to signal expectations of a sizeable surplus early next year. Trend-following commodity funds remain heavily skewed toward short positions, which could heighten volatility as markets react to unexpected developments.

Data Signals a Market Still Searching for Direction

Despite the geopolitical lift, crude has struggled to build lasting momentum. WTI stood at $59.43 per barrel on December 2, down 0.13% from the previous day, extending a month-long decline of 2.65%. In a broader perspective, prices remain far below the July 2008 record of $147.27, highlighting the structural shift in global demand dynamics, improved efficiency, and the growing role of alternative energy sources.

Looking ahead, traders will focus on inventory data, macroeconomic indicators, and any escalation in geopolitical flashpoints. While the market currently appears cushioned by risk premiums, sustained price strength will ultimately depend on evidence of demand recovery—something that remains elusive as global growth indicators soften.