Crude extended losses as peace talks and demand fears offset Venezuela risks

Oil prices extended losses on Monday, marking a second consecutive decline as progress in Washington and Kyiv peace discussions and weaker Chinese economic data outweighed supply disruptions in Venezuela. Market sentiment remained firmly bearish, with investors increasingly focused on the prospect of a structural oversupply in 2026 rather than near-term logistical constraints.

Brent crude settled down 56 cents, or 0.92%, at $60.56 a barrel, its lowest close since May. WTI fell 62 cents to $56.82 a barrel, the weakest settlement since February 2021.

Bearish momentum was reinforced by analysts’ projections of a widening supply glut, with global oil output forecast to outpace demand growth by roughly threefold through 2026. Concerns over demand were further compounded by soft economic signals from China, where factory output growth slowed to a 15-month low in November while retail sales growth also decelerated, underscoring persistent weakness in the world’s largest oil importer.

Geopolitical developments offered mixed signals. Although the US seizure of a Venezuelan tanker and subsequent cyberattacks on state oil firm PDVSA introduced supply friction, the market largely discounted these risks, citing ample Venezuelan crude already en route to China. 

Instead, attention shifted to Berlin, where constructive talks between US and Ukrainian officials raised the possibility of a ceasefire, potentially paving the way for a gradual return of Russian barrels to global markets.

Written by: Aiman Haikal