According to the latest monthly report released by the International Energy Agency, crude oil markets experienced heightened volatility at the start of the New Year as geopolitical tensions surrounding Iran and Venezuela briefly pushed prices higher. Benchmark crude prices jumped by around $6 per barrel in early January, with Brent rising to about $66/bbl, before easing back toward $64/bbl as tensions moderated. North Sea Dated crude averaged $62.64/bbl in December, down $0.99/bbl month-on-month, marking a sixth consecutive monthly decline and the weakest level since early 2021.

The report highlights growing uncertainty around supply from Iran and Venezuela, where export volumes have already come under pressure. Iranian crude loadings declined by 350 kb/d from October highs to around 1.6 mb/d, while Venezuelan exports fell sharply from 880 kb/d in December to roughly 300 kb/d in early January due to US restrictions. In contrast, Russian crude production rebounded strongly in December, rising by 550 kb/d to a 33-month high, although widening discounts reduced export revenues. Disruptions in the Black Sea and Caspian regions also weighed on Kazakh supplies.

Despite these geopolitical risks, the IEA notes that global oil markets remain well supplied. Benchmark prices are still about $16/bbl lower than a year ago, reflecting a large supply surplus built over the past 12 months. Global oil inventories rose by 470 mb in 2025, supported by strong non-OPEC+ supply growth and rising stocks in China and the United States. With supply projected to increase by a further 2.5 mb/d in 2026 and demand expected to grow by 930 kb/d, ample buffers are likely to keep prices in check in the near term.

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