Oil Prices Rebound Despite Annual Pressures Amid Middle East Tensions and Ukraine Talks

New York | EcoPulse24

Global oil prices climbed on Monday, with West Texas Intermediate (WTI) crude rising above $57 per barrel and Brent crude exceeding $61 per barrel, trimming losses of over 2% from the previous session. This recovery came as markets assessed escalating tensions in the Middle East and developments in Ukraine peace talks.

Prices were supported by rising geopolitical unrest in the region, including Saudi airstrikes in Yemen and Iran’s declaration of a “full-scale war” with the U.S., Europe, and Israel. This renewed concerns over potential oil supply disruptions and raised risk premiums in energy markets.

Meanwhile, U.S. President Donald Trump reported “significant progress” in talks with Ukrainian President Volodymyr Zelensky, who noted that a peace framework was nearly complete with about 90% of the terms agreed, though key issues remain unresolved, leaving markets cautiously optimistic.

On the demand side, China announced plans to expand fiscal spending in 2026, signaling continued economic growth support and boosting expectations for increased energy and oil consumption in the world’s second-largest economy.

Fuel and petroleum product prices also saw movement. Gasoline rose to around $1.71 per gallon on December 29, 2025, up 0.53% daily, but remained down 8.86% month-on-month and 13.7% year-on-year due to abundant supply and seasonal demand declines. U.S. heating oil contracts attempted to rebound toward $2.15 per gallon after hitting six-month lows, driven by renewed geopolitical risks that raised crude input costs.

Security developments added to supply concerns, as U.S. forces intercepted a Venezuelan crude tanker and pursued another vessel, while a Ukrainian drone attack targeted a Russian "shadow fleet" tanker. Although Venezuela represents less than 1% of global supply, these events increased market risk premiums.

On the supply side, rising global production continued to pressure prices in 2025, with OPEC+ resuming previously halted output and non-OPEC producers, especially in the Americas, increasing production. Additional pressure came from a rise in U.S. distillate inventories by 2.502 million barrels in the week ending December 5, following a 2.059 million barrel increase the previous week, both exceeding market expectations of 1.9 million barrels.

Despite the recent rebound, oil prices are set for an annual loss exceeding 20% in 2025, the sharpest decline since 2020, amid expectations of a global supply surplus in 2026. Market outlooks remain tied to supply-demand balances and ongoing geopolitical developments.