Global oil prices rose on Monday as investors assessed the potential impact of renewed diplomatic talks between the United States and Iran, while also keeping an eye on anticipated supply increases from OPEC+.
Brent crude futures gained 90 cents, or 1.33 per cent, to close at $68.65 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude advanced 86 cents, or 1.37 per cent, to $63.75 per barrel as of 2:14 p.m. EST (1914 GMT). The WTI contract did not officially settle due to the U.S. Presidents Day holiday.
Market analysts say concerns over potential supply disruptions stemming from tensions between Washington and Tehran have provided underlying support for prices. Tamas Varga of PVM noted that fears of escalation have helped stabilize the market in recent sessions.
Trading activity, however, remained somewhat subdued as several Asian markets prepared for the Lunar New Year holidays, including China, South Korea and Taiwan.
Despite Monday’s gains, both major benchmarks recorded losses last week. Brent crude fell by roughly 0.5 per cent, while WTI dropped about 1 per cent. The decline followed comments by former U.S. President Donald Trump suggesting that Washington could potentially reach a deal with Tehran within a month.
The United States and Iran are scheduled to hold a second round of discussions in Geneva on Tuesday, focusing on Tehran’s nuclear programme. Ahead of the talks, which are being mediated by Oman, Iran’s foreign minister met with the head of the U.N.’s nuclear watchdog, the International Atomic Energy Agency, to discuss key issues.
According to reports, an Iranian diplomat indicated that Tehran is seeking a broad nuclear agreement that would deliver economic gains for both countries. Potential areas of cooperation include energy and mining investments, as well as aircraft purchases.
However, U.S. officials have also signalled that Washington is preparing contingency plans, including the possibility of a prolonged military campaign if diplomatic efforts fail. In response, Iran’s Revolutionary Guards have warned of retaliation against U.S. military bases should Iranian territory come under attack.
Analysts at SEB suggested that escalating tensions could push Brent crude prices as high as $80 per barrel, while easing tensions might see prices retreat toward $60.
Even as geopolitical risks provide upward pressure, supply-side considerations are tempering gains. OPEC and its allies are expected to consider resuming output increases at their March 1 meeting, potentially unwinding a three-month production pause starting in April.
Additional support for oil prices has come from robust Chinese demand and some disruptions to global exports, according to Giovanni Staunovo, an analyst at UBS. China’s imports of Russian crude are projected to rise for a third consecutive month in February, reaching a new record. The increase follows a reduction in purchases by India amid pressure from the United States, traders and ship-tracking data show.
As diplomatic negotiations unfold, the oil market remains finely balanced between geopolitical uncertainty and shifting supply dynamics.
