Oil Prices Rebound as Sanctions Risk and Venezuela Moves Stir Market Uncertainty

BY COMFORT OGBONNA

Oil prices climbed on Thursday, snapping a two-day losing streak as investors weighed fresh geopolitical developments involving Venezuela alongside signs of progress on proposed U.S. sanctions targeting countries that continue doing business with Russia. The rebound reflected renewed concern that political decisions could tighten supply routes at a time when the market is already grappling with conflicting signals on demand and inventories.

Brent crude futures rose 59 cents, or nearly 1%, to $60.55 a barrel by 1038 GMT, while U.S. West Texas Intermediate crude advanced 58 cents, or about 1%, to $56.57. The gains came after both benchmarks had slid more than 1% in the previous session, driven by expectations of ample global supply and cautious sentiment about the demand outlook for the year ahead.

Market analysts pointed to developments in Washington as a key factor supporting prices. The U.S. president has allowed a bill proposing tougher sanctions on Russia to move forward, raising concerns that Russian oil exports could face further disruptions. Such a move has the potential to reshape global crude flows, particularly if major buyers are forced to curb purchases or seek alternative suppliers. Republican Senator Lindsey Graham said on Wednesday that the president had effectively given the green light for the legislation, adding that a vote could take place as early as next week, a timeline that has kept traders on edge.

Despite Thursday’s rebound, the broader market remains weighed down by expectations of oversupply. Analysts at Morgan Stanley have forecast a surplus of up to 3 million barrels per day in the first half of 2026, reflecting rising production and only modest growth in global demand. This outlook has limited the upside for oil prices, even as geopolitical risks periodically inject volatility into trading.

Inventory data from the United States added to the mixed picture. Government figures released on Wednesday showed that gasoline and distillate stockpiles rose by more than analysts had expected in the week ended January 2, suggesting softer near-term demand for refined products. Crude oil inventories, however, declined during the same period, offering some support to prices by signaling tighter supplies at the production level.

Attention has also turned to Venezuela following a deal announced earlier this week between Washington and Caracas that could give the United States access to as much as $2 billion worth of Venezuelan crude. The arrangement may initially require rerouting cargoes that were previously destined for China, potentially altering established trade patterns. Chinese independent refiners, which account for a large share of the country’s Venezuelan oil imports, may compensate for any shortfall by increasing purchases of Iranian crude.

Adding another layer of complexity, U.S. authorities seized two Venezuela-linked oil tankers in the Atlantic Ocean on Wednesday, including one sailing under the Russian flag. The action underscores the administration’s increasingly assertive approach to influencing oil flows in the Americas and pressuring Venezuela’s socialist government to realign politically. Together, these developments have reinforced uncertainty in the oil market, helping to lift prices even as longer-term supply concerns continue to loom.