Oil Prices Climb 2% as Supply Risks Intensify and OPEC+ Maintains Output Levels

BY COMFORT OGBONNA

Oil prices surged by 2% on Monday as a series of geopolitical and supply-related disruptions unsettled the global energy market. A drone strike on key export infrastructure in the Black Sea and rising tensions between the United States and Venezuela added fresh uncertainty, while OPEC+ opted to keep production levels unchanged for the first quarter of 2026.

Brent crude futures climbed $1.26, or 2.02%, reaching $63.64 a barrel by 0953 GMT. U.S. West Texas Intermediate crude also strengthened, rising $1.27, or 2.17%, to $59.82 a barrel. The gains marked a sharp contrast to the declines seen late last week, when both benchmarks finished lower for the fourth consecutive month— their longest losing streak since 2023.

The sharp uptick in prices followed news that the Caspian Pipeline Consortium (CPC), responsible for transporting about 1% of the world’s oil supply, halted operations after one of its moorings at a Russian Black Sea terminal was damaged during a Ukrainian drone attack. The disruption threatened to tighten supply flows, although Chevron, a major CPC shareholder, said late on Sunday that loadings were still being carried out at the nearby port of Novorossiysk.

The market also responded to OPEC+’s decision to maintain its existing production targets. The group had signalled a slowdown in its push to reclaim market share back in early November, amid fears that excessive output could trigger an oversupply. Market analysts said the latest decision helped steady sentiment among traders who have been concerned about swelling global stockpiles. According to LSEG senior analyst Anh Pham, the move “provided some relief and helped stabilise expectations for supply growth in the coming months.”

Geopolitical tensions further complicated the outlook. U.S. President Donald Trump declared over the weekend that the airspace around Venezuela should be considered closed, igniting fresh concerns about potential disruptions from the South American producer. Although Trump later stated that his comments should not be over-interpreted, he offered no further details after confirming he had spoken with Venezuelan President Nicolas Maduro.

Analysts at ING noted in a client briefing that supply risks are increasing due to continued Ukrainian attacks on Russian energy infrastructure and the growing strain between Washington and Caracas. The heightened uncertainty also weighed on European market sentiment, especially as recent optimism surrounding a possible Russia-Ukraine peace agreement has faded. Hopes that a deal could unlock significant quantities of Russian crude had contributed to bearish outlooks in previous weeks, but those expectations have now reversed as geopolitical developments remain unpredictable.

Overall, Monday’s price rebound reflected a market grappling with multiple layers of risk—ranging from physical supply disruptions to diplomatic flashpoints—setting the stage for a potentially volatile period ahead.