Geopolitics Heats Up, But Oil Remains Held Back by Surplus
Oil prices edged higher in recent trading, continuing their gains after posting their biggest daily gain in a week. However, market direction remains mixed as market participants weigh two competing narratives: resurgent geopolitical risks versus lingering concerns about a global supply surplus.
In European markets, Brent held steady around US$62 per barrel after strengthening by around 1.7% in the previous session. Attention remains focused on developments in Venezuela following the fall of Nicolás Maduro, including planned talks between industry leaders and Washington regarding the future of Venezuela's energy sector. Meanwhile, Middle East tensions have fueled sentiment after Israel reiterated its stance against allowing Iran to rebuild its ballistic missile capabilities.
Despite the geopolitical headlines, major market participants believe that oil prices will remain within their limits as long as there are no real supply disruptions. Several industry players believe that the additional barrel contribution from Venezuela this year is likely to be small, so the impact on prices will not be felt immediately.
The main restraining factor remains the loose global supply outlook. Venezuela currently accounts for only a small portion of global production, so even export disruptions are considered insufficient to sustainably boost prices. In fact, surplus pressure has led Saudi Arabia to cut oil prices for Asia for the third consecutive month—a sign that supply competition remains intense.
Several investment banks also believe the supply surplus could widen in the first half of 2026 and peak in the middle of the year. This is why price projections for the first few quarters of 2026 are tending to be lowered, especially after oil prices last year recorded their biggest annual decline since 2020 due to increased barrels from OPEC+ and other producers.
Meanwhile, the discourse on Venezuela's energy "revival" continues to be closely monitored. The US oil and gas industry is reportedly in discussions with the government, and US Secretary of Energy Chris Wright is said to want to dialogue with oil executives about options to revive the sector. President Donald Trump has also signaled financial support to accelerate infrastructure recovery—which has caused US oil company shares to strengthen.
In morning trading in London, Brent for March delivery rose around 0.4% to US$62.01 per barrel. WTI for February delivery is hovering around US$58.55 per barrel, reflecting a market still trying to find a balance between geopolitical headlines and the reality of a supply surplus. (alg)
Source: Newsmaker.id
