Uncertainty Grips Oil Markets as Geopolitical Tensions Outweigh Price Direction

Oil markets displayed a notable lack of constructive momentum on Friday, with crude for January delivery trading in volatile territory following Thursday’s significant selloff. After plunging 1.5 percent to $57.60 per barrel the previous day, West Texas crude extended its struggle, settling near $57.40 a barrel—down just $0.20 or 0.4 percent as traders grappled with conflicting directional signals.

The underlying cause of this lack of clarity stems from intensifying geopolitical headwinds. Traders remained fixated on unfolding developments in the Russia-Ukraine conflict while simultaneously processing escalating U.S.-Venezuela tensions. These competing narratives created a tug-of-war dynamic in the market, preventing any sustained directional conviction.

Venezuela-related sanctions provided a temporary spark for crude prices early in the session. The U.S. Treasury Department announced fresh sanctions targeting three relatives of Venezuelan President Nicolas Maduro alongside six entities involved in shipping Venezuelan crude exports. Treasury Secretary Scott Bessent issued a stern statement, declaring: “Nicolas Maduro and his criminal associates in Venezuela are flooding the United States with drugs that are poisoning the American people.” Initially, this hawkish stance lifted oil valuations, as markets interpreted tighter Venezuelan supply constraints as bullish.

However, the rally proved short-lived. As the trading session progressed, the initial enthusiasm waned, and crude exhibited the kind of lack of directional clarity that has increasingly characterized energy markets amid persistent macro uncertainty. The combination of geopolitical risk premiums and weakening momentum suggests crude remains caught between competing forces—unable to establish a clear conviction either upward or downward.