By: Economy Middle east

Oil prices held steady early on Wednesday, following a five-day rally driven by robust U.S. economic data and heightened geopolitical tensions. Brent crude hovered around $62.47 per barrel (up 0.14 percent), while West Texas Intermediate (WTI) traded at $58.50 (up 0.21 percent), reflecting a cautious market stance amid supply concerns and inventory builds.

Brent crude futures settled above $62, marking a modest gain after five consecutive sessions of increases totaling nearly 6%. WTI held firm above $58 a barrel, supported by traders weighing supply risks against swelling U.S. stockpiles.

Prices have oscillated in a narrow range throughout 2025, between $60 and $81, as geopolitical premiums faded earlier in the year but resurfaced amid fresh tensions. December has seen volatility, with crude peaking at $63.93 on December 5 and bottoming at $59.03 on December 16.

Strong U.S. economic growth underpinned the recent rally, bolstering demand outlooks despite broader oversupply signals. U.S crude inventories fell by 1.274 million barrels in the week ending December 12, exceeding expectations for a 1.1 million barrel draw, with Cushing s.tocks dropping 742,000 barrels. However, analysts anticipated further declines last week, with estimates ranging from a 1.1 million barrel build to a 6.4 million barrel drop. 

Swelling inventories overall tempered gains, as non-OPEC production rose and global demand remained subdued. Refineries operated at high capacity, pushing refined product stocks higher, including gasoline and distillates. 

Escalating risks provided a floor under prices, with U.S. actions intensifying pressure on Venezuela’s oil exports. Washington pursued a third tanker off Venezuela’s coast, boarding one vessel and targeting another, as part of efforts to curb Nicolás Maduro’s revenues. Ukraine’s first drone strike on a Russian shadow fleet tanker in the Mediterranean added to supply disruption fears, following attacks on Russian energy facilities.

These developments injected a risk premium, countering earlier bearish sentiment from potential Russia-Ukraine peace talks and Venezuelan concerns. Tensions have supported prices despite a nearly 20 percent yearly drop, driven by OPEC+ output hikes and weak demand. 

OPEC’s December monthly report showed no change in world demand forecasts, but non-DOC liquids and NGLs revised higher by 100 kb/d for 2025. OPEC 12 output dipped 1 kb/d in October, with gains from Saudi Arabia (+54 kb/d), UAE (+16 kb/d), and Kuwait (+13 kb/d) offset by cuts in Venezuela (-27 kb/d), Iraq (-21 kb/d), and Iran (-19 kb/d). 

The Big 4 (Saudi Arabia, UAE, Iraq, Kuwait) hold about 766 kb/d spare capacity, having ramped output from 18,346 kb/d in April to 20,073 kb/d by October—a 1,727 kb/d increase. OPEC+ plans modest December hikes of 137 kb/d, decelerating from earlier expansions totaling over 2.7 million b/d since April, amid oversupply worries.