Oil Climbs as Iran, Venezuela and Russia-Ukraine Raise Supply Concerns

Brent crude settled up $1.35, or 2.18%, at $63.34 a barrel on Friday, reflecting a market that has begun to price a geopolitical risk premium into oil following fresh tensions in three major producing regions. Intraday reads across outlets showed Brent trading across the low-$60s through the day, including $62.58 at 1204 GMT, $61.85 at 09:40 GMT and $60.20 in early Asian trading. U.S. West Texas Intermediate quoted between roughly $56 and $58 depending on the time and source, with one Reuters snapshot at $58.30.

Traders said the immediate catalysts were escalating anti-government protests in Iran, U.S. engagement over Venezuelan crude in storage and renewed risks to shipping from the Russia-Ukraine conflict. "Iran protests seem to be gathering momentum, leading the market to worry about disruptions," Ole Hansen, head of commodity analysis at Saxo Bank, told Reuters, a view that helped underpin buying in London and New York.

In Washington, officials invited oil majors and trading houses to discussions about Venezuelan export deals, and U.S. officials have been reported to be considering marketing as many as 50 million barrels of crude that state-run PDVSA holds in storage. Market strategists said the immediate effect of any re-routing of Venezuelan cargoes to the United States would be to relieve storage pressure and shift flows that had been going to other buyers, notably China. "The market would focus on the outcome in the coming days for how the Venezuelan oil in storage will be sold and delivered," Tina Teng, a market strategist at Moomoo ANZ, told Reuters.

Security concerns tied to the Russia-Ukraine war also resurfaced. Coverage noted a reported drone attack on a Russia-bound tanker in the Black Sea, reinforcing the potential for disruptions to Russian exports and adding a premium to freight and insurance costs.

Underlying fundamentals provided mixed signals. The U.S. Energy Information Administration reported a 3.8 million-barrel draw in crude stocks to 419.1 million barrels for the week to Jan. 2, versus a Reuters poll that had expected a 447,000-barrel rise. That unexpected draw added short-term buying impetus, and both benchmarks had climbed more than 3% on the prior trading day, leaving Brent on track for roughly a 3% weekly gain and WTI up about 1.7% for the week.

Yet several research desks cautioned that structural oversupply and policy settings limit sustained upside. Morgan Stanley estimated a potential surplus of as much as 3 million barrels per day in the first half of 2026, and TD Securities noted Venezuela currently exports about 0.8 million barrels per day while any major capacity increases would take years and large investment. TD Securities also highlighted position-squaring and a significant short base as reasons a short squeeze could push prices around $60 even if fundamentals remain bearish. "Pullback buying nudged prices higher but persistent oversupply would cap upside and could push WTI below $54," Mitsuru Muraishi of Fujitomi Securities told CNBC.

Market participants said the near-term picture is now governed by an interplay of episodic geopolitical shocks and structural supply dynamics. Geopolitical events can trigger sharp, short-lived spikes that reposition flows and inventories, but analysts widely expect that a broad surplus and steady OPEC policy will keep a sustained breakout above $60 through the first half of 2026 unlikely.