Last week, oil prices experienced their highest weekly gain since early January, with Brent oil prices recovering losses from March. Rising tensions in the Middle East, which create a risk premium, contributed to this increase.
The ceasefire between Israel and Hamas appears fragile, and escalating attacks risk further conflict. Recent US airstrikes on Houthi positions may also involve Iran, alongside tightened US sanctions against Iranian oil, affecting potential buyers.
Venezuelas Oil Production And Tariff Concerns
Additionally, Venezuela’s oil production has nearly doubled since 2020, raising concerns about new tariffs on oil imports. However, anticipated higher OPEC+ supply may restrain further price increases as production cuts allow for expanded output.
The rebound in oil prices last week suggests that the energy market is responding strongly to geopolitical uncertainty. A major part of this has been the heightened instability in the Middle East, which has pushed traders to consider potential supply disruptions.
Geopolitical risks remain high. The truce between Israel and Hamas is hanging by a thread, and any escalation in hostilities threatens broader tensions in the region. Following recent US airstrikes on the Houthis, there is growing uncertainty about how Tehran might respond. On top of this, Washington’s tighter sanctions on Iranian crude add an extra layer of complexity, since they could squeeze supply at a time when the market has already been jittery. This has prompted markets to reassess the availability of exports from the region.
At the same time, there has been a shift in South American oil supply. Caracas has managed to nearly double output levels compared to four years ago. While this may bring some balance to global production, there are growing debates over the likelihood of new tariffs on these exports. If restrictions increase, this could tighten supply routes once again.
OPEC Supply Adjustments And Market Reactions
One element that could offset further price surges is linked to OPEC+. With output quotas becoming more flexible, some producers might seek to capitalise on higher prices by bringing additional barrels to market. If this materialises in the coming weeks, it could place a lid on aggressive price increases, depending on how demand holds up.
For derivatives traders, these push-and-pull forces will be important to track as energy markets remain volatile. Those watching price movements should factor in how geopolitical risks and shifting production levels might interact. If tensions persist without new supply relief, the upward pressure on crude prices will likely continue, affecting market positions across futures and options markets. Yet, any hint of expanded output from producers could introduce fresh resistance to price rallies.
