Oil rises 2% on supply worries
FILE PHOTO: A drone view of a pump jack and drilling rig south of Midland, Texas, U.S. June 11, 2025. REUTERS/Eli Hartman/File Photo
LONDON, Dec 1 : Oil prices rose 2 per cent on Monday as the Caspian Pipeline Consortium halted exports after a major drone attack and U.S.-Venezuela tensions raised concerns about supply, while OPEC+ agreed to leave oil output levels unchanged for the first quarter of 2026.
Brent crude futures advanced $1.26, or 2.02 per cent, to $63.64 a barrel by 0953 GMT. U.S. West Texas Intermediate crude gained $1.27, or 2.17 per cent, to $59.82.
The Caspian Pipeline Consortium, which carries 1 per cent of global oil, on Saturday said it halted operations after a mooring at its Russian terminal on the Black Sea was damaged by a Ukrainian drone. Chevron, a CPC shareholder, said late on Sunday that loadings were continuing at the Russian port of Novorossiysk.
The Organization of the Petroleum Exporting Countries and its allies initially agreed on a pause in early November, slowing a push to regain market share with looming fears of a supply glut.
LSEG senior analyst Anh Pham said the market was reacting positively to the news.
"For some time, the narrative has centred on an oil glut, so OPEC+’s decision to maintain its production target provided some relief and helped stabilise expectations for supply growth in the coming months."
Brent and WTI crude futures settled lower on Friday for the fourth straight month, their longest losing streak since 2023, as expectations for higher global supply weighed on prices.
On Saturday, U.S. President Donald Trump said "the airspace above and surrounding Venezuela" should be considered closed, sparking fresh uncertainty in the oil market, as the South American nation is a major producer.
Trump on Sunday said he had spoken to Venezuelan President Nicolas Maduro but did not give details. He also did not expand on his airspace comments or say whether they signalled coming military strikes.
"Don't read anything into it," Trump said.
In a client note, ING analysts wrote that "supply risks increase following additional Ukrainian attacks on Russian energy infrastructure and an escalation in tensions between the U.S. and Venezuela."
In Europe, increasing uncertainty around a Russia-Ukraine peace deal reversed the bearish sentiment of the past two weeks, when an agreement looked closer and raised the prospect of large volumes of Russian oil flooding the market.
