Energy Markets: Oil Spikes 3% on Geopolitical Supply Checks

Crude oil prices (WTI and Brent) staged a sharp recovery on Monday, with New York futures jumping over 3% to trade above $61.26 per barrel. The rally is being driven by a convergence of supply-side threats in the Middle East, overshadowing demand concerns from the US and China.

Market Snapshot

• Key Gainers: WTI and Brent crude benchmarks.
• Price Action: Rally exceeding 3%.
• Current Level: Trading above $61.26 per barrel.

Supply Chain Threats

• Iraq Sanctions Threat: The Trump administration has reportedly threatened to restrict Iraq's access to oil revenue dollars unless Baghdad disbands Iranian-backed militias, risking output from OPEC's second-largest producer.
• Israel-Iran Tensions: The Israeli Defense Forces (IDF) are on “high alert,” anticipating potential retaliatory strikes following US maneuvers, putting transit routes at risk.

Economic Data Headwinds

Despite the supply risk premium, macroeconomic data presents a ceiling. The US Leading Economic Index (LEI) declined again in October and November, signaling potential economic deceleration into 2026. Furthermore, the US may lift tariffs on India in exchange for energy policy shifts.

Trading View

The immediate bias for oil is bullish on geopolitical headlines, but sustained upside requires confirmation that physical supplies are actually disrupted, rather than just threatened.