SINGAPORE: Oil markets remained on edge as investors weighed the risk of supply disruptions from intensifying unrest in Iran against the prospect of renewed exports from Venezuela, leaving prices steady with only modest gains.
Brent crude futures hovered around $63.3 a barrel and U.S. West Texas Intermediate near $59 a barrel as traders balanced geopolitical risks with expectations of an oversupplied market in 2026.
Concerns over Iran’s protests — the most severe since 2022 — have prompted calls for strikes among oil workers and raised fears about the stability of exports through key routes such as the Strait of Hormuz, even as analysts say markets have yet to price in major disruptions.
Meanwhile, efforts to bring Venezuelan crude back into global supply chains, including potential shipments of previously sanctioned barrels, have tempered price moves and kept crude in a relatively narrow trading range
Market Moves:
Brent crude futures climbed modestly by 5 cents to around $63.39 a barrel, while U.S. West Texas Intermediate (WTI) crude traded about 4 cents higher at $59.16 early in Asian hours. Both benchmarks had logged their largest weekly gains since October last week, lifted by rising geopolitical tensions.
Iran’s Impact:
Oil traders have flagged intensifying protests in Iran — one of OPEC’s key producers — as a potential threat to supply. The unrest, now the most severe since 2022, has sparked calls from some quarters for oil workers to strike and raised fears about the safety and continuity of exports, including shipments through the Strait of Hormuz, a chokepoint for nearly a fifth of global crude flows.
Despite these concerns, many investors remain cautious, with analysts noting that the market is reluctant to price in a significant risk premium until there is clear evidence of actual disruption to Iranian crude flows.
Venezuela’s Return to the Market:
Temperatures in the oil market were further tempered by expectations that Venezuelan crude — long constrained by sanctions and production setbacks — may soon return to global export channels. Under new political developments, Caracas is reportedly preparing to make available up to 50 million barrels of sanctioned oil to U.S. buyers, a move that could add fresh supply into the market once logistics and shipping are arranged.
Oil companies are said to be scrambling to secure tankers and repair operations at Venezuela’s dilapidated port facilities in preparation for shipments — a sign that supply pressures from that quarter could ease, at least in the near term.
Market Sentiment and Outlook:
While geopolitical tensions in the Middle East have injected a risk premium into prices recently, analysts warn that broader oversupply expectations for 2026 may cap any sharp advances. Unless there is a tangible disruption to crude flows or a clear resurgence in demand, prices are expected to remain in a fairly narrow trading range.
Investors are also keeping an eye on other potential supply challenges, including possible impacts on Russian output from ongoing attacks linked to the Ukraine conflict and the threat of future U.S. sanctions.
Impact on Pakistan:
Fluctuations in global oil prices have direct implications for Pakistan, which relies heavily on imported crude to meet its energy needs. Any sustained increase in prices driven by supply risks in Iran could raise Pakistan’s oil import bill, putting additional pressure on already strained foreign exchange reserves.
Higher international prices may also translate into increases in domestic fuel and electricity costs, adding to inflationary pressures and raising the cost of living. This could complicate government efforts to manage subsidies and maintain price stability amid ongoing fiscal challenges.
However, the potential return of Venezuelan crude to global markets may help cap sharp price rises, offering Pakistan some relief if additional supply keeps prices in check. Overall, Pakistan remains vulnerable to global oil market volatility, making price stability crucial for economic management and inflation control.
Overview:
Oil markets remain finely balanced, with geopolitical supply risks from Iran providing support to prices even as fresh Venezuelan barrels loom on the horizon.
Traders and analysts will be watching closely for actual supply disruptions or clear signals of increased output to determine the next major directional move in crude prices.
