Oil prices climbed on Monday as traders confronted a convergence of geopolitical risks, supply disruptions, and shifting sentiment within the energy complex. West Texas Intermediate pushed above $59 per barrel, extending gains after a weekend attack damaged a crucial Black Sea export facility. The move comes at a time when broader fundamentals point toward oversupply heading into 2025, creating a volatile backdrop where even isolated events can generate outsized price reactions.

A Critical Black Sea Terminal Disrupted

The most immediate catalyst for Monday’s price jump was the halt in crude loadings at a key Caspian Pipeline Consortium mooring. The system, which transports nearly 1.6 million barrels per day of Kazakh crude to global markets, suffered severe damage after an explosion linked to Ukrainian attacks on Russian energy infrastructure. CPC operators said that further operations at the affected mooring were “impossible,” raising questions about near-term export flows and the potential need to reroute supply.

The incident underscores how Ukraine’s expanding campaign against Russian oil assets is increasingly influencing global energy markets. Refineries, tankers, and export terminals have been frequent targets in recent months as the conflict nears its fourth year. While Kyiv did not comment specifically on the Black Sea strike, officials confirmed separate attacks over the weekend. For traders, the latest escalation serves as a reminder that geopolitical risk premiums — which had faded through the autumn — remain capable of resurfacing suddenly.

Bearish Fundamentals Temper the Upside

The supply shock arrives at a moment when the macro outlook for crude is distinctly bearish. Analysts broadly expect a significant oversupply next year, driven by non-OPEC production growth and cooling global demand. Trend-following commodity trading advisers — many of whom amplify directional momentum — entered the week with roughly 90% net-short exposure, according to Bridgeton Research Group. Such extreme positioning means that even modestly bullish developments can trigger outsized reversals as automated strategies unwind bearish bets.

Still, the broader dynamic remains one of a market struggling to reflect ample supplies in price action. Futures recently ended a multi-week slide, but analysts caution that the fundamental imbalance remains intact. For many investors, Monday’s rebound reflects the vulnerability of a heavily shorted market rather than a meaningful shift in long-term expectations.

Venezuela and OPEC+ Add Additional Layers of Risk

Beyond Eastern Europe, traders are responding to potential US military operations in Venezuela after President Trump warned that Venezuelan airspace should be considered closed. Washington is expected to review its next steps in a meeting Monday evening, according to CNN. Any escalation in Venezuela — a country with a troubled but still significant oil industry — risks further supply disruptions and could influence regional tanker flows.

OPEC+ added another variable by reaffirming its three-month pause on output increases in early 2025. The group cited weak seasonal demand, though the decision also reflects an effort to counteract growing fears of a supply glut. Yet even with the producer bloc’s intervention, many analysts say it will take time for bearish fundamentals to fully manifest in prices unless geopolitical tensions subside.

Looking Ahead

The coming weeks will test whether structural oversupply or geopolitical disruption sets the tone for oil markets heading into 2025. Traders will monitor repairs at the Black Sea terminal, signals from Washington on Venezuela, and any shifts in algorithmic positioning that could fuel rapid price swings. With risk premiums returning to the forefront, the market may experience sharper-than-normal volatility as supply threats collide with an otherwise soft demand outlook.