Geopolitics and China Lead Oil Prices to Surge
Oil prices rose on Monday after US-led talks to end Russia's war in Ukraine faced new complications, while China pledged to support growth next year. West Texas Intermediate (WTI) rose 2.4% to close above $58 per barrel, while Brent closed near $62 per barrel. US President Donald Trump reported progress in peace talks with Ukrainian President Volodymyr Zelenskiy, although Russian President Vladimir Putin indicated that Moscow would revise its position following the alleged drone attack on his residence.
Despite the rally, oil prices are still on track for a fifth consecutive monthly decline in December, which would be the longest losing streak in more than two years. Concerns about a global oversupply, with increased production from OPEC+ and countries outside the group, have weighed on prices. However, geopolitical tensions, from Venezuela to Nigeria, have helped curb price declines in recent weeks. Issues related to Ukraine, including the future of the Donbas region, continue to support oil prices.
On the other hand, China, as the world's largest oil importer, has committed to expanding fiscal spending in 2026 to boost growth, despite facing headwinds such as a property market downturn and trade friction with the US. Beijing's crude oil hoarding is expected to continue, helping to absorb the supply surplus. Geopolitical tensions are also rising in the Middle East, which could threaten the flow of oil supplies from the region, particularly if an attack on Iran escalates. Furthermore, Trump has intensified measures against Venezuela, with a maritime blockade that could impact global oil supplies.
Source: Newsmaker.id
