Adding to supply uncertainty, Ukraine intensified strikes on Russia’s energy infrastructure this week. Reports suggested two major Black Sea oil ports temporarily halted tanker loadings due to drone threats. These facilities handle more than 2 million barrels per day of Russian and Kazakh exports, underlining the vulnerability of a key artery in global oil flows. Concerns over sanctions also resurfaced after U.S. President Donald Trump warned European nations against reliance on Russian oil and hinted at tougher measures ahead.

However, oil’s upward momentum was capped by signs of additional supply returning to markets. A deal between Iraq’s federal government and Kurdish authorities is expected to restart Kurdish crude exports within days, easing some fears of shortages. At the same time, analysts noted that seasonal demand is tapering off, with U.S. travel data showing slower growth in air passenger traffic and a pullback in gasoline consumption. These trends point to a possible cooling of demand as winter approaches.

Investor sentiment also reflected broader caution. U.S. equities logged consecutive down days, feeding into a more “risk-off” environment that weighed on commodity prices. UBS analysts highlighted that while oil remains supported by geopolitical risk, renewed oversupply concerns and softer demand indicators are encouraging traders to take profits after recent gains.

Looking ahead, the balance between geopolitics and fundamentals will likely dictate price action. On one hand, persistent threats to Russian energy flows and the possibility of new sanctions provide a risk premium. On the other, the return of Kurdish supplies and slower U.S. demand could push prices lower. Markets may remain volatile as traders weigh whether global supply risks outweigh the seasonal dip in consumption.

For investors, this environment suggests a mixed strategy. Traders could consider short-term opportunities in crude oil futures or energy-linked ETFs during geopolitical flare-ups, while maintaining caution against potential pullbacks tied to rising supply and weaker demand. Longer-term, gold and other defensive assets may serve as hedges against continued geopolitical risk, while energy sector equities with strong balance sheets could benefit if oil stabilizes above recent support levels.