Oil heads for weekly gains, geopolitical tensions offset oversupply risks
Oil prices are stabilizing at high levels near $63 per barrel, heading for weekly gains driven by rising geopolitical risks in Eastern Europe and Latin America.
Global oil prices are heading for a weekly gain, with geopolitical risks now dominating the scene and acting as a major supportive factor offsetting expected oversupply pressures.
Geopolitical risks
Behind this rally are two major geopolitical factors:
- Frozen prospects for peace in Ukraine: Prospects for a peace deal between Russia and Ukraine in the short term look weak, prolonging the uncertainty that disrupts supply flows and keeps the risk premium in prices.
- Rising tensions with Venezuela: Growing diplomatic confrontations between the U.S. and Venezuela, a country with huge oil reserves, are disrupting supply routes and increasing the risk of market disruption.
Current figures and levels
In this environment, Brent crude is stabilizing at $63.00 per barrel, recording a weekly gain of 1.5%.
West Texas Intermediate (WTI) is trading around $59.20 per barrel, with a weekly gain of 1.8%.
The next challenge: Balancing the oversupply
Despite the geopolitical tailwinds, oil markets still face a fundamental challenge: the oversupply that formed during the fourth quarter of 2025 and is expected to extend into 2026.
However, the strength of the current 'risk premium' shows its ability, so far, to counterbalance this structural pressure.
U.S. Inflation Index
The U.S. Personal Consumption Expenditure (PCE) price index, the Federal Reserve's preferred measure of inflation, will be released today.
This reading will have a significant impact on the outlook for global monetary policy and the strength of the dollar, which in turn could affect investor demand for commodities including oil.
The current geopolitical tensions between Russia, Ukraine, the United States and Venezuela are supporting oil prices and spurring weekly gains, despite oversupply concerns.
Immediate performance remains dependent on the development of these events, along with the US inflation reading which will frame the dollar's relative strength.
