Oil Prices Surge WoW Despite Oversupply Concerns
Oil prices surged week-on-week (WoW) despite oversupply concerns. Latest data showed U.S. crude inventories dipped amidst geopolitical concerns and growing expectations that Venezuelan supply could return to global markets.
Brent crude traded at $62 per barrel, up by 2.1% from last Friday’s close of $60.73. US benchmark West Texas Intermediate (WTI) rose 1.4% to $58 per barrel, compared with $57.21 a week earlier.
At the start of the week, markets weighed the potential impact of US actions in Venezuela, with prices fluctuating as geopolitical risks competed with expectations of ample supply.
Concerns that tensions could disrupt supply were tempered by assessments that Venezuela’s oil production and refining infrastructure had not suffered material damage and that global supply conditions remained comfortable.
Those dynamics carried into Tuesday as Washington’s engagement with US oil companies and signals that Energy Secretary Chris Wright and Secretary of State Marco Rubio would lead talks reinforced expectations that Venezuelan output could recover over the medium term, capping upside.
Selling pressure intensified midweek after President Donald Trump said interim authorities in Venezuela had agreed to transfer between 30 million and 50 million barrels of sanctioned oil to the US. Markets interpreted the remarks as signaling increased supply rather than tighter conditions, adding to oversupply concerns.
Expectations of returning Venezuelan barrels were further reinforced when state-run oil company PDVSA said negotiations with the US to sell crude were progressing, while the White House signaled a selective easing of sanctions that could allow Venezuelan oil to re-enter global markets.
By Friday, pressure on prices persisted after Trump said the US and Venezuela were “working well together” to rebuild the country’s oil and gas infrastructure.
Trump said oil companies are expected to invest at least $100 billion to modernize Venezuela’s energy sector and confirmed he would meet with top executives at the White House.
He also said a previously anticipated second wave of military attacks on Venezuela had been canceled, citing cooperation between the two sides, while US naval assets would remain in place for security purposes.
Markets viewed the remarks as further signaling Washington’s preference for restoring and expanding Venezuelan oil output, reinforcing oversupply concerns and limiting price gains despite ongoing geopolitical risks.
US inventory data showed a roughly 3.8 million-barrel draw in commercial crude stocks, easing concerns over an immediate demand slowdown and helping prices finish the week higher.
While strategic petroleum reserves and gasoline inventories posted sizeable builds—underscoring ample supply and soft end-user demand — the crude draw limited downside pressure.
In addition, broader Middle East uncertainties prevented risk premiums from fully evaporating.
President Trump warned that the US could intervene if Iranian authorities respond violently to demonstrations.
“If Iran violently kills peaceful protesters, which is their custom, the US will come to their rescue. We are locked and loaded and ready to go,” Trump said.
Meanwhile, OPEC+’s decision to keep output levels unchanged signaled that no immediate additional supply would enter the market, providing further short-term support and allowing oil prices to close the week in positive territory. Oando Defies Recent Weakness with Santa Claus Rally
