Oil prices edged lower on Tuesday as traders balanced concerns over supply surpluses against geopolitical risks stemming from Ukrainian drone attacks on Russian energy infrastructure.

The January WTI crude contract on the New York Mercantile Exchange fell $0.68 (1.15%) to settle at $58.64 per barrel. Meanwhile, the January Brent crude contract declined $0.72 (1.14%) to close at $62.45 per barrel.

Both benchmarks had gained over 1% on Monday, with WTI hovering near two-week highs.

"Recent price pressures from the global supply glut are being offset by escalated attacks on Russian infrastructure over the weekend and rising U.S.-Venezuela tensions," said Janiv Shah, analyst at Rystad Energy. "Geopolitical risk premiums have increased in recent sessions as Russian-affiliated vessels become targets."

On Monday, the Caspian Pipeline Consortium resumed oil shipments from one mooring point at its Black Sea terminal after sustaining large-scale Ukrainian drone strikes on November 29.

Additional uncertainty emerged after the U.S. President declared Saturday that "Venezuelan airspace and surrounding areas" should be considered closed, potentially affecting supplies from the major South American producer.

"Market focus also centers on Ukraine peace talks, which could prompt Russia to resume increasing crude and refined product exports, though the process may face delays," noted Tamas Varga, analyst at PVM Oil Associates.

In diplomatic developments, the U.S. envoy and senior advisor are scheduled to meet with Russian leadership Tuesday to discuss potential paths to end the conflict.

Oil markets have faced pressure in recent months from OPEC+ production increases fueling concerns about potential oversupply. Against this backdrop, the producer group agreed Sunday to maintain first-quarter 2026 output levels unchanged, slowing its market share recovery amid looming surplus worries.