Oil Prices Rise on Supply Fears, but Still Face Yearly Decline
By Praisebell Rosemond Larbi
Global oil prices edged higher at the start of the week, supported by renewed geopolitical tensions that have raised concerns about potential supply disruptions. However, despite the short-term gains, crude prices remain significantly lower than last year, as expectations of an oversupplied global market continue to weigh heavily on investor sentiment.
On December 22, 2025, Brent crude rose to $61.33 per barrel, marking a 1.43 per cent increase from the previous day. The move extended gains recorded at the end of last week and provided some temporary relief for prices that have struggled to find sustained upward momentum in recent months.
Even with the latest uptick, the broader trend remains weak. Over the past month, Brent prices have declined by 2.21 per cent, while on a year-on-year basis prices are down by 15.55 per cent. This underscores the fragile nature of the market, where prices remain highly sensitive to geopolitical headlines but continue to trend lower over the longer term.
The immediate catalyst for the latest rise was heightened concern over supply risks linked to geopolitical developments in the Americas and Eastern Europe. Tensions between the United States and Venezuela have intensified, following reports that the US is pursuing another vessel near Venezuelan waters. Washington has already seized two oil tankers this month, including one over the weekend, raising fears that Venezuelan oil exports could face further disruption.
Venezuela’s oil sector, already constrained by sanctions and operational challenges, remains a key focus for traders, as any reduction in exports could tighten supplies in certain regional markets, even if the impact on global balances is limited.
Meanwhile, developments linked to the Russia–Ukraine conflict have added another layer of uncertainty. Ukraine reportedly struck a Russian oil tanker in the Mediterranean Sea for the first time, following earlier attacks on Russian energy infrastructure connected to Lukoil in the Caspian Sea. These incidents have heightened concerns about the safety of oil shipments and energy assets, particularly as the conflict shows no clear signs of resolution.
Diplomatic efforts continue in the background. On Sunday, US and Ukrainian officials described recent talks held in Miami as “productive and constructive,” although no major breakthroughs were announced. As a result, markets remain cautious, recognising that the war continues to pose a persistent risk to global energy flows.
Despite these geopolitical pressures, analysts argue that the dominant factor shaping oil prices remains supply. Global production levels are expected to stay elevated, with output from major producers continuing to outpace demand growth. This oversupply outlook has capped price gains and is the primary reason oil prices are still on track for an annual decline.
Market watchers note that while geopolitical tensions can trigger short-lived price spikes, sustained rallies will be difficult without clearer signs of tightening supply or a stronger recovery in global demand. For now, oil markets appear caught between recurring geopolitical shocks and a structurally well-supplied environment, leaving prices vulnerable to volatility but biased to the downside over the medium term.
