During Tuesday’s trading session, oil prices experienced a moderate increase which was driven primarily by heightened geopolitical tensions involving Iran and concerns over potential disruptions to global supply. These factors are bound to offset market expectations of rising crude exports from Venezuela. By early morning, Brent crude futures had advanced by 0.4%, reaching USD 64.15 per barrel, remaining close to a two-month high established in the prior session. Similarly, U.S. West Texas Intermediate crude rose by 0.5%, to USD 59.78 per barrel translating to its highest level since early December.
The geopolitical backdrop remains volatile, with Iran, a significant producer within OPEC, facing its most substantial anti-government protests in years. In response to reports of deadly violence against demonstrators, U.S. President Donald Trump issued a warning of potential military action. President Trump is scheduled to meet with senior advisers to evaluate further options regarding Iran. Additionally, he reiterated on Monday 12th January 2026, that any nation engaging in business with Iran would face a 25% tariff on commerce with the United States. Analysts note that these developments have injected a geopolitical risk premium into oil prices, with Barclays estimating that the unrest in Iran has added approximately USD 3 to USD 4 per barrel.
Broader Uncertainties Weigh on Oil Demand
Meanwhile, the market is balancing these supply risks against the prospect of increased crude availability from Venezuela. Following the ouster of President Nicolás Maduro, the Trump administration indicated that the interim government in Caracas could transfer up to 50 million barrels of oil, subject to Western sanctions, to the United States. Global oil trading firms have positioned themselves advantageously in anticipation of redirecting Venezuelan crude flows, outpacing traditional U.S. energy majors in early arrangements.
Further contributing to market uncertainty are escalating tensions in Eastern Europe, where Russian forces launched attacks on Ukraine’s two largest cities early Tuesday, resulting in at least one casualty. In the United States, renewed criticism from the Trump administration aimed at the Federal Reserve has raised concerns about the central bank’s independence, adding another layer of ambiguity regarding future economic conditions and oil demand. Together, these interconnected geopolitical and economic factors continue to shape a complex and fluid outlook for global oil markets.
