Oil Prices Climb as Iranian Instability Threatens Global Supply

2026-01-12 economy

Tehran, Monday, 12 January 2026.
Civil unrest in Iran now threatens 1.9 million barrels of daily exports, driving crude prices higher despite parallel U.S. efforts to secure Venezuelan oil inventories.

Market Volatility Amidst Middle East Tensions

Global oil markets are currently navigating a volatile landscape defined by escalating geopolitical risks in the Middle East and strategic supply shifts in South America. On Monday, January 12, 2026, crude futures extended their gains, with Brent crude rising 0.49% to $63.65 per barrel and U.S. West Texas Intermediate (WTI) climbing 0.51% to $59.42 per barrel [1]. The primary catalyst for this upward momentum is the intensifying civil unrest in Iran, which analysts warn could disrupt significant volumes of crude exports from the OPEC nation [1]. These gains build upon a strong performance the previous week, where both contracts rose more than 3%, marking their largest weekly increase since October [1].

Escalating Instability in Iran

The security situation in Iran has deteriorated rapidly, creating substantial anxiety regarding global energy flows. Rights groups reported on January 11 that ongoing civil protests have resulted in over 500 deaths [1]. This internal instability poses a direct threat to the country’s energy sector; analysts at ANZ, led by Daniel Hynes, estimate that approximately 1.9 million barrels per day (bpd) of oil exports are currently at risk of disruption due to the turmoil [1]. Furthermore, reports indicate that strikes have spread to the oil sector, including workers at a major refining and petrochemical complex [4]. While data from Kpler suggests a full regime collapse remains a low-probability event, the firm notes that the rising risk is already embedding a significant geopolitical premium into oil markets [4].

Broader Geopolitics and Supply Constraints

Beyond Iran, the market is digesting broader geopolitical frictions that are tightening the supply narrative. Over the weekend of January 10-11, Ukraine targeted three Lukoil-owned platforms in the Caspian Sea, continuing its campaign against Russian energy infrastructure [2]. This follows reports from January 9 that the Russian military fired a hypersonic Oreshnik missile at energy targets in Ukraine [5]. These hostilities are compounded by data showing that OPEC’s total oil output fell by 100,000 bpd in December to 28.40 million bpd [6]. Notably, Iranian crude supply itself dropped by 100,000 bpd in December amid the ongoing unrest and sanctions [6].

The Venezuelan Pivot

Counteracting the bullish pressure from the Middle East are accelerated efforts to bring Venezuelan crude to the United States. On January 10, President Trump announced that the government in Caracas is prepared to transfer as much as 50 million barrels of sanctioned oil to the U.S. [1]. To facilitate this, commodity trading house Trafigura stated on January 9 that its first vessel was scheduled to load Venezuelan oil for export to the U.S. within the week of January 5 [1]. However, production challenges persist; Venezuelan supply declined by 70,000 bpd in December, and Energy Aspects forecasts production will slip further to 950,000 bpd in January from 1.1 million bpd the previous month [6][8]. This juxtaposition of potential Iranian disruptions against the logistical release of Venezuelan stockpiles creates a complex, push-and-pull environment for energy investors.

Sources

Geopolitics Crude Oil