Crude oil futures posted back-to-back gains and finished the week higher, as renewed geopolitical tensions involving Iran and the Russia–Ukraine conflict overshadowed concerns about a potential increase in Venezuelan oil supply under U.S. oversight.
Markets opened the year much as they ended 2025—caught between heavy speculative positioning and recurring supply-side risks. According to Neil Crosby of Sparta Commodities, underlying market dynamics remain fragile despite persistent talk of excess supply.
“The year began largely as 2025 left off, with substantial market length simmering in the background but fairly large supply and geopolitical risks continuously popping up in the foreground,” Crosby said in a research note. “If many of those risks become real at the same time, the glut narrative will disappear rapidly.”
Weekly Gains Reflect Risk Premium
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West Texas Intermediate (WTI) crude climbed 2.4% on the day to $59.12 a barrel, marking a 3.1% gain for the week.
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Brent crude rose 2.2% to $63.34 a barrel, posting a stronger 4.3% weekly advance.
The gains reflect a rising risk premium as traders reassess supply security in key producing regions. While expectations of higher Venezuelan output had weighed on prices earlier, those concerns were offset by the possibility of disruptions stemming from geopolitical flashpoints.
Supply vs. Risk: A Delicate Balance
The oil market continues to wrestle with competing narratives. On one hand, additional supply—particularly from Venezuela—could add barrels to an already well-supplied market. On the other, escalating geopolitical risks threaten to disrupt flows far more quickly than new production can come online.
For now, traders appear to be placing greater weight on what could go wrong, rather than what might add supply. As Crosby notes, should multiple geopolitical risks materialize simultaneously, sentiment could shift sharply, erasing expectations of a prolonged supply glut.
Outlook
Oil prices remain highly sensitive to headlines, with volatility likely to persist as markets balance supply optimism against geopolitical uncertainty. For investors and traders, the message is clear: while supply fundamentals matter, geopolitics is once again setting the tone for crude markets.
Article By-Shahzad Ahmad
Frequently Asked Questions
Why did crude oil prices rise this week?
Oil prices increased as geopolitical risks involving Iran and the Russia–Ukraine conflict boosted concerns about potential supply disruptions, outweighing fears of increased Venezuelan oil production.
What role did Venezuela play in market sentiment?
Expectations of higher Venezuelan oil supply under U.S. oversight initially pressured prices, but those concerns were offset as traders focused more on geopolitical risks that could threaten global supply.
What does “market length” mean, and why does it matter?
“Market length” refers to a situation where many traders hold long (bullish) positions in oil. While this can support prices, it also makes the market vulnerable to sharp moves if sentiment suddenly shifts.
How significant were the weekly price gains?
WTI crude rose 3.1% for the week to $59.12 a barrel, while Brent crude gained 4.3% to $63.34, signaling a meaningful rebound driven by rising risk premiums.
What could cause the oil “glut narrative” to disappear?
f multiple geopolitical risks materialize at the same time—such as supply disruptions in key producing regions—the current expectation of excess supply could quickly fade, pushing oil prices higher.
