Summary: Ramon Kara examines how rising USA-Russia tensions could send oil prices to historic highs.

London, United Kingdom, November 04, 2025, As tensions between the United States and Russia escalate, the global energy market is once again preparing for instability that could drive oil prices to unprecedented levels. According to Ramon Kara, a senior commodities analyst with St Mary Capital, the geopolitical environment has become one of the most significant bullish factors influencing crude oil prices in recent years. With both the US and Russia playing crucial roles in the global energy supply chain, any rift in their political or commercial ties could result in sharp price increases that reverberate across economies worldwide.

Oil has long served as an indicator of geopolitical stability. When two of the world’s largest powers collide, the risk premium on petroleum rises as markets begin to price in potential supply shortages, sanctions, and logistical disruptions. Kara explains that the stakes are especially high today: the US is not only a leading producer but also plays a key role in sanctions enforcement and international energy policy, while Russia remains one of the largest global oil exporters. This volatile dynamic means even minor escalations could trigger significant price swings.

Trade Flows Under Pressure

The confrontation between Washington and Moscow is already reshaping global trade flows. Sanctions on Russian energy exports have forced buyers to seek alternative suppliers, often at higher costs and with longer delivery times. This restructuring of the oil market is creating inefficiencies, driving prices upward while straining refineries and shipping capacity. In some regions, refiners are paying record premiums to secure steady supplies, costs that are quickly passed on to industries and consumers alike. Kara believes these supply chain pressures are unlikely to ease soon, making it increasingly probable that oil prices will surpass their previous record highs.

Rising Demand Adds Fuel to the Fire

Global demand recovery is intensifying the problem. After years of pandemic-driven slowdowns, economic activity is accelerating, especially in emerging markets. Industrial output, transportation needs, and energy-intensive sectors are all consuming more crude oil. The result is a tightening supply-demand balance that magnifies the effects of geopolitical unrest. Kara cautions that this is not just a theoretical risk: oil benchmarks have already been climbing steadily, signalling that the convergence of strong demand and geopolitical disruption is happening in real time.

Currency Volatility Complicates the Picture

Adding another layer of complexity is the volatility of the US dollar. Since oil is globally priced in dollars, fluctuations in the currency can swing demand. A weaker dollar makes oil cheaper for international buyers, boosting consumption, while a stronger dollar has the opposite effect. In today’s environment, defined by political uncertainty and currency instability, traders face a highly unpredictable market where sentiment can shift dramatically from week to week. According to Kara, this volatility feeds investor speculation and creates additional momentum behind rising prices.

Technical and Psychological Drivers

From a technical perspective, oil is approaching key resistance levels that, if broken, could mark the beginning of a new bull market phase. Traders are closely watching the charts for signals of a breakout, with many positioning themselves for a rally beyond previous highs. Momentum-driven buying could intensify the surge as hedge funds, institutional players, and retail traders all rush to capitalise on the trend. Kara notes that commodity markets often experience self-reinforcing price spikes, and oil is no exception.

Psychology also plays a major role. Markets can rally on the mere perception of scarcity, even without a tangible supply disruption. The belief that US-Russia tensions might escalate to the point of impacting production or exports adds a risk premium that pushes prices higher. Compounding this is the limited ability of alternative energy sources to replace petroleum in critical industries such as heavy manufacturing, aviation, and shipping. Oil’s irreplaceable role in the global economy ensures that even perceived threats to supply can spark swift market reactions.

Looking Ahead: A Global Inflexion Point

In the months ahead, investors and policymakers alike will be monitoring developments on both diplomatic and market fronts. Any additional sanctions, military manoeuvres, or disruptions to supply routes could send oil surging further. Analysts, including Kara, agree that the conditions are ripe for oil to enter uncharted territory.

The consequences, however, extend well beyond trading floors. A surge in oil prices would force governments to reconsider energy strategies, challenge businesses with higher production costs, and burden consumers with more expensive fuel. Kara underscores that this is not merely a market event but a geopolitical and economic turning point that could shape the global energy landscape for years to come.

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