Oil Gains 2% As Traders Reverse Course, Make Supply Tightness Their New Concern

But it's not enough to ward off a dismal December for the commodity, Bloomberg says: File Image/Pixabay

Although the signals were persistent from the beginning, oil traders who were upbeat about a positive outcome of the Russia/Ukraine peace talks caused oil on Monday to surge over 2 percent based on the sudden fear the talks may go south – and possibly exacerbate supply disruptions.

Brent settled up $1.30, or 2.1 percent, at $61.94 per barrel, and West Texas Intermediate settled up $1.34, or 2.4 percent, at $58.08.

Moscow reportedly will review its position in the peace talks after the former Soviet Union accused Ukraine of staging a drone attack on the Russian presidential residence in the northern part of the country.

Ritterbusch and Associates stated, "Unless Russia surprises the world by backing away from previous demands regarding territory and security guarantees, we are looking for the complex to edge higher through the rest of this week and next week."

Supply disruption fears were also stoked by air strikes conducted by Saudi Arabia in Yemen against that region's main southern separatist group.

Consolidating concerns of disruption was Giovanni Staunovo, analyst at UBS, who said waterborne Chinese crude imports were tightening oil markets and that the situation would grow more pronounced soon because non-OPEC supply growth would probably stall in mid-2026.

But none of this was enough to dent oil's performance in the final days of 2025: Bloomberg noted
that,  "Oil is still on track for a fifth monthly drop in December, which would be the longest run of declines in more than two years."

In related oil news on Monday, an anonymous source told media that Kazakhstan's crude and condensate production has fallen by 6 percent so far in December compared to the average output in November, thanks to Ukraine drone attacks damaging pipelines and a key export terminal on Russia's Black Sea last month.

Also on Monday, CNOOC Ltd. of China reported its discovery of a major new oilfield in the Bohai Sea: the Qinhuangdao 29-6 discovery, estimated to hold more than 100 million tons of medium-heavy crude, or about 730 million barrels.

CNOOC pointed out that Qinhuangdao 29-6 "is the second one-hundred-million-ton-class lithological oilfield discovered in the mature exploration area of the Shijiutuo Uplift, further highlighting the value of fine exploration and consolidating the resource base for increasing reserves and production for the Company."