Oil Prices Jump on Geopolitical Tensions Despite Steep Annual Losses

Global oil prices rebounded sharply on Monday, with crude oil leading gains across commodity markets as investors reacted to escalating geopolitical risks and shifting demand expectations.

West Texas Intermediate (WTI) crude oil futures climbed more than 2 percent to trade above 58 dollars per barrel, recovering from losses recorded in the previous session. Brent crude also rose, gaining over 2 percent to nearly 62 dollars per barrel. The rally came as markets weighed growing instability in the Middle East alongside developments in Ukraine peace negotiations.

Heightened tensions in the Middle East have renewed fears of potential supply disruptions. Saudi air strikes in Yemen and Iran’s declaration of a “full-scale war” involving the United States, Europe and Israel have raised concerns about oil flows from a region critical to global energy supply. These risks have injected a fresh risk premium into oil prices, even as broader fundamentals remain weak.

At the same time, comments from US President Donald Trump suggesting progress in talks with Ukrainian President Volodymyr Zelenskyy offered mixed signals to markets. While Zelenskyy indicated that around 90 percent of a peace framework had been agreed, investors remain cautious, noting that any eventual resolution could allow more Russian oil back onto global markets that are already facing oversupply.

Support for crude prices also came from China, where authorities announced plans to expand fiscal spending in 2026. The move has lifted expectations of stronger economic activity and higher energy consumption in the world’s largest oil importer.

Despite Monday’s rebound, oil prices remain under significant pressure on a broader horizon. WTI crude is still down more than 18 percent over the past year and is on track for its steepest annual decline since 2020. Brent crude has also posted double-digit losses, reflecting persistent concerns about a global supply surplus expected next year.

Other energy commodities followed oil higher, with natural gas, gasoline and heating oil all posting modest gains. However, the wider commodity complex showed mixed performance, as precious metals and industrial commodities such as copper and silver declined sharply, underscoring ongoing volatility in global markets.

Analysts say oil markets are likely to remain sensitive to geopolitical developments and demand signals from major economies, with short-term price spikes driven by risk events continuing to clash with longer-term concerns about oversupply and slowing global growth.