Can Geopolitical Tensions Keep Oil Prices Afloat in 2026?
Source: Kapitales Research
Highlights:
Oil prices started 2026 slightly higher after suffering steep declines through 2025.
Ukraine-Russia tensions and drone attacks lifted geopolitical risk premiums.
New U.S. sanctions on Venezuela are tightening export routes and constraining supply.
A cautious start to the new year
Oil prices rose a little in early Asian trade on January 2, the first trading day of 2026, as geopolitical tensions helped support the market after a tough year. .At the time of writing, both benchmarks were edging higher, with Brent crude around $61.03 a barrel, up 0.30%, and U.S. West Texas Intermediate rising 0.30% to about $57.59. The modest rebound follows a turbulent 2025, when both global benchmarks slid by nearly 20%, marking their steepest annual decline since the pandemic-driven crash in 2020. Investors entered 2026 cautiously, weighing fragile demand growth against a still-well-supplied market.
Ukraine-Russia tensions return to focus
Early price support came after renewed accusations of cross-border attacks between Ukraine and Russia over the New Year period. President Volodymyr Zelensky said via Telegram that Russia deployed more than 200 drones targeting power infrastructure across a number of regions. Russian authorities, meanwhile, said their own industrial and energy sites had also been hit by drone attacks. These developments revived concerns about potential disruptions to energy infrastructure, reminding traders that geopolitical risk remains a powerful short-term driver of oil prices.
U.S. sanctions add supply concerns
Further upward pressure came from tougher U.S. action against Venezuela’s oil trade. Washington this week sanctioned four companies and several oil tankers allegedly involved in sanctioned Venezuelan exports. The measures effectively prevent those vessels from operating, tightening export channels.
As a result, Venezuela’s state-run oil company PDVSA has reportedly begun shutting in some extra-heavy crude wells in the Orinoco Belt as storage capacity fills up.
A fragile balance for oil markets
Despite these risks, the broader outlook remains cautious. Global supply is still ample, and demand growth remains uncertain. For now, geopolitical tensions appear to be the main force keeping oil prices supported — even as structural pressures continue to weigh on the market.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au
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Can Geopolitical Tensions Keep Oil Prices Afloat in 2026?
Highlights:
A cautious start to the new year
Oil prices rose a little in early Asian trade on January 2, the first trading day of 2026, as geopolitical tensions helped support the market after a tough year. .At the time of writing, both benchmarks were edging higher, with Brent crude around $61.03 a barrel, up 0.30%, and U.S. West Texas Intermediate rising 0.30% to about $57.59. The modest rebound follows a turbulent 2025, when both global benchmarks slid by nearly 20%, marking their steepest annual decline since the pandemic-driven crash in 2020. Investors entered 2026 cautiously, weighing fragile demand growth against a still-well-supplied market.
Ukraine-Russia tensions return to focus
Early price support came after renewed accusations of cross-border attacks between Ukraine and Russia over the New Year period. President Volodymyr Zelensky said via Telegram that Russia deployed more than 200 drones targeting power infrastructure across a number of regions. Russian authorities, meanwhile, said their own industrial and energy sites had also been hit by drone attacks. These developments revived concerns about potential disruptions to energy infrastructure, reminding traders that geopolitical risk remains a powerful short-term driver of oil prices.
U.S. sanctions add supply concerns
Further upward pressure came from tougher U.S. action against Venezuela’s oil trade. Washington this week sanctioned four companies and several oil tankers allegedly involved in sanctioned Venezuelan exports. The measures effectively prevent those vessels from operating, tightening export channels.
As a result, Venezuela’s state-run oil company PDVSA has reportedly begun shutting in some extra-heavy crude wells in the Orinoco Belt as storage capacity fills up.
A fragile balance for oil markets
Despite these risks, the broader outlook remains cautious. Global supply is still ample, and demand growth remains uncertain. For now, geopolitical tensions appear to be the main force keeping oil prices supported — even as structural pressures continue to weigh on the market.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au