Global oil markets are poised to record their most significant weekly advance in over two months, fueled by escalating geopolitical tensions in two key regions. The dual pressures of a US-led partial blockade of Venezuelan crude and a military strike against terrorists in Nigeria have provided a substantial boost to prices, countering prevailing concerns about a supply glut.
US Tightens the Screws on Venezuelan Oil Exports
The primary driver behind this week's surge is the intensified focus of the Trump administration on quarantining oil shipments from Venezuela. According to sources familiar with the matter, US commanders have been ordered to concentrate efforts on this blockade for the next two months. The strategy appears to be one of economic pressure, with a person who requested anonymity stating that US forces are focused "almost exclusively on the blockade, rather than military options."
This policy shift had an immediate market impact. A sanctioned tanker being pursued by US forces was forced to turn away from the South American nation, a clear signal of Washington's resolve. The benchmark US crude, West Texas Intermediate (WTI), held steady above $58 a barrel, marking a weekly gain of more than 3%—its strongest performance since the period ending October 24.
Geopolitical Flare-ups Counter Bearish Supply Outlook
This price support comes against a backdrop of an otherwise bearish year for oil. US oil remains on track for its largest annual decline since 2020, having slumped approximately 18%. The downturn has been largely driven by expectations of a surplus in 2025, with major traders anticipating a global glut following increased output from both OPEC and non-OPEC producers.
However, the recent geopolitical events have effectively placed a floor under prices. The situation escalated further in Africa, where the United States launched a direct military intervention. President Donald Trump announced via social media that the US executed a "powerful and deadly strike against ISIS terrorist" in Northwest Nigeria. Nigeria, a member of OPEC, is a significant producer, pumping about 1.5 million barrels per day as of November.
US Defense Secretary Pete Hegseth followed the announcement with a warning, indicating "more to come" if Islamic State continues targeting "innocent Christians in Nigeria." Details regarding the strike's impact or the weaponry used remain undisclosed, as the White House did not respond to requests for further information.
Broader Global Context and Market Implications
Meanwhile, other global events continue to shape the energy landscape. In Europe, Ukrainian President Volodymyr Zelenskiy reported a productive discussion with US envoys Steve Witkoff and Jared Kushner, aiming to end the conflict with Russia. In a related military action, Kyiv targeted the Novoshakhtinsk refinery in Russia's Rostov region, highlighting the ongoing war's potential to disrupt regional stability.
For market observers and investors in India, a major oil-importing nation, these developments underscore the fragile balance between supply fundamentals and geopolitical risk. While the long-term forecast may point to ample supply, short-term price volatility is almost guaranteed when production from key nations like Venezuela and Nigeria faces threats. The week's events serve as a stark reminder that oil prices are often swayed more by headlines from conflict zones than by spreadsheet forecasts.
