Oil prices fall as market weighs geopolitical risks against negative fundamentals

Global oil prices fell slightly on Tuesday, in a corrective move after two days of strong gains.

The volatility comes as traders and investors balance rising geopolitical risks against negative supply and demand fundamentals in the final weeks of 2025.

Trading details and oil prices today

Brent crude futures fell 0.2%, to settle at $61.94 per barrel.

The West Texas Intermediate crude futures fell 0.2% to settle at $57.87 per barrel.

What happened yesterday? Strong rally:

The slight dip comes a day after prices made a big jump on Monday, where:

- Oil prices jumped more than 2%.

- Brent crude recorded its best daily performance in two months.

- WTI crude hit its highest gain since November 14.

Why is the oil market so volatile and what are the factors influencing the oil market?

The market is oscillating under the influence of two opposing forces:

- Geopolitical push factors (escalating risks):

• Attacks in the Black Sea: Ukrainian attacks on Russian ships and docks, and vice versa, have escalated in this vital waterway, raising serious concerns about supply disruptions.

• The Venezuelan oil issue: The U.S. has signaled the possibility of selling seized Venezuelan crude, putting pressure on the supply side.  

- Fundamental (structural) pressures:

• The broader picture of the 2025 oil market points to a fragile equilibrium, where weak global demand is offset by oversupply.

• Long-term structural concerns about ample supplies often overshadow any short-term spikes resulting from political crises.

• Cautiousness dominates the market outlook as we approach early 2026 and the expectation of continued ample oil supplies.  

Oil Market Outlook in 2026

The current landscape remains sensitive to any sudden developments. While any prolonged geopolitical disruptions, especially in critical production or transportation areas, may temporarily push prices higher, the outlook suggests that supply and demand fundamentals will determine the overall trend in the medium term. Traders continue to monitor any major economic data affecting the demand outlook, and OPEC+ developments on production policies.