West Texas Intermediate (WTI) oil prices rose to about $59.30 after OPEC+ paused production increases. This decision stops all hikes that were expected to begin in early 2026, shifting away from a previous increase of nearly 2.9 million barrels per day since April 2025. **Geopolitical Tensions and Oil Supply** Geopolitical tensions, especially between the US, Russia, and Ukraine, might affect oil supplies if US sanctions on Russia are lifted. OPEC+ is also introducing a new system to evaluate production capabilities starting in 2027. Meanwhile, the Caspian Pipeline Consortium has stopped loadings due to damages, disrupting the flow of Kazakh oil. In other news, the US is considering closing Venezuelan airspace amid rising tensions, threatening about 800,000 barrels per day mainly sent to China. Expectations that the Federal Reserve may cut interest rates are supporting oil prices, with an 87.4% chance of a 25-basis-point cut in December. WTI prices depend on supply and demand, geopolitical events, and the value of the US Dollar. Weekly inventory reports from the American Petroleum Institute and the Energy Information Agency also affect prices. OPEC’s decisions, including adjustments to quotas, strongly influence WTI price movements, underscoring its role in the global oil market. The recent choice by OPEC+ to pause production increases from early 2026 sends a positive signal for oil prices. This decision helps stabilize the market after several months of rising output. The last report from the EIA, dated November 26, 2025, showed a crude inventory drop of 3.5 million barrels, well above expectations. **Supply Risks and Geopolitical Uncertainty** Immediate supply risks must be considered, with disruptions along the CPC pipeline and tensions between the US and Venezuela threatening over 2.2 million barrels per day. This kind of geopolitical uncertainty can increase market volatility, making call options an appealing way to seize potential price spikes in the coming weeks. For example, similar tensions in the Middle East in 2024 caused WTI volatility, measured by the OVX index, to soar over 15% within a week. The anticipated interest rate cut by the Federal Reserve this month provides strong support for crude prices by weakening the US Dollar. The Dollar Index (DXY) has fallen from about 105 to 102 in the past month, aligning with this expected shift. A more relaxed monetary policy could boost economic activity and energy demand as we approach 2026. While the outlook seems positive, we should stay cautious about the chance of de-escalation between Russia and Ukraine. If sanctions are eased, it could bring a large amount of Russian oil back to the market, creating downward pressure on prices. Thus, using strategies like bull call spreads might be wise, allowing participation in potential price increases while limiting risk in case the geopolitical situation changes unexpectedly. Create your live VT Markets account and start trading now.

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