Morning Highlights: Supply Risks Resurface

Monday, Dec 1, 2025

Oil markets are rebounding sharply to start the week as fresh supply disruptions, renewed geopolitical tensions, and an OPEC+ decision to keep output steady all collide with a market that had been trading heavily on surplus concerns. Traders are weighing the immediate impact of the Caspian Pipeline Consortium export halt and the U.S.-Venezuela escalation against the longer-term signals from OPEC+ that stability now outweighs any push to reclaim market share.

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Market Snapshot

• Feb Brent crude futures up 66 cents to $63.04 by 6:15 ET after early gains of ~2% pulled back.

• Jan WTI crude up 65 cents to $59.20.

• Both benchmarks settled lower Friday, completing a fourth straight monthly decline, the longest losing streak since 2023.

• Market sentiment has swung from surplus fears to renewed supply-risk pricing.

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Geopolitics & Supply Risks

• The Caspian Pipeline Consortium (1% of global supply) halted exports Saturday after a major Ukrainian drone attack damaged a loading mooring.

• Chevron later said loadings at Novorossiysk continue, softening initial shock.

• U.S.–Venezuela tensions escalated, with the U.S. declaring Venezuelan airspace “closed,” injecting uncertainty given Venezuela’s role as a key producer.

• Trump’s comments offered no clarification on whether military action was implied.

• ING notes that supply risks are rising as Ukrainian attacks on Russian energy infrastructure increase and U.S.–Venezuela tensions add another layer of instability.

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OPEC+

• OPEC+ left oil output unchanged for Q1 2026, reaffirming its earlier November pause.

• The group emphasized that stability outweighs ambition amid deteriorating market outlooks.

• About 3.24 million bpd of cuts remain active, roughly 3% of global demand.

• The baseline-capacity assessment mechanism for 2027 quotas was approved:

o Capacity evaluation to run Jan–Sep 2026.

o One company will assess 19 of 22 members; sanctioned members (Russia, Iran, Venezuela) will use alternate methods.

• Saudi Energy Minister called the decision the “most transparent” mechanism yet for future quota-setting.

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Russia–Ukraine Peace Dynamics

• Recent movement toward a peace deal — which had previously pressured prices on expectations of a Russian supply return — has stalled, reversing the bearish tone of early October.

• Uncertainty now dominates as negotiations drag on without resolution.

• A successful deal could lead to sanctions relief and higher supply; a failed deal risks further sanctions tightening.

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Macro & Market Structure

• Despite Friday’s close near $63 Brent, the benchmark remains down 15% YTD.

• The market is shifting from a “glut narrative” toward a recognition of multi-front supply constraints.

• Analysts highlight the delicate balance: short-term risks vs. medium-term surplus expectations.

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The market opens the week with a significant sentiment reevaluation: after months of trading on looming surplus concerns, traders are now forced to price in mounting supply risks from the CPC outage, U.S.–Venezuela tensions, and increasingly volatile Russia-related infrastructure attacks. OPEC+’s decision to hold production steady reinforces the group’s pivot toward stability, giving the market a clearer anchor amid the geopolitical turbulence.