Geopolitical Tensions Fuel Rally: Will Oil Prices Go Up Further?

Energy markets surged Wednesday morning as multiple geopolitical flashpoints weighed on investor sentiment. Crude futures climbed to their highest levels in two weeks, signaling growing concerns about potential supply disruptions in key producing regions.

Market Performance & Current Valuations

West Texas Intermediate futures for February delivery rose $0.20 to $58.58 per barrel, representing a 0.35% gain. Brent crude climbed $0.18, or 0.29%, to reach $62.57 per barrel. This upward momentum occurred despite API data revealing a 2.4 million-barrel increase in U.S. crude stockpiles last week, with gasoline and distillate inventories also accumulating. The Energy Information Administration is scheduled to release its weekly inventory report at 10:30 AM ET.

What’s Driving The Momentum?

The rally appears anchored to two major risk factors reshaping the energy landscape.

Venezuela Supply Concerns: The Trump administration’s designation of the Nicolas Maduro regime as a “foreign terrorist organization” has escalated tensions significantly. Following accusations of illegal narco-trafficking and contributions to the U.S. opioid crisis, the U.S. Navy implemented a blockade targeting Venezuelan ports, restricting access for “sanctioned vessels.” Military operations have already resulted in the seizure of two vessels off the Venezuelan coast, with additional vessels in the U.S. Coast Guard’s sights. The administration stated intentions to either stockpile seized oil for strategic reserves or liquidate it on open markets.

Eastern European Tensions: The Ukraine-Russia conflict continues to threaten energy infrastructure across the Black Sea region. After Ukrainian forces targeted the Tamanneftegaz oil terminal in Russia’s Krasnodar region, Russian retaliation struck Ukraine’s Odesa port facility on Monday, damaging port infrastructure and disrupting a cargo vessel. The assault damaged critical energy systems, affecting power supply to approximately 120,000 residents in surrounding areas.

The Question Forward: Will Oil Prices Go Up?

Both supply disruption risks and geopolitical uncertainty suggest upward pressure remains embedded in the market. Venezuelan production capacity faces mounting constraints, while regional conflicts threaten established energy corridors. However, the surplus in U.S. inventories provides some countervailing force against price acceleration.