Oil markets showed resilience on Monday, maintaining most of the strong gains recorded in the previous session. Brent crude for March delivery slipped slightly by 0.1% to $65.84 per barrel, while West Texas Intermediate (WTI) edged down 0.1% to $61.03 per barrel.
The minor pullback followed Friday’s rally, where both benchmarks surged more than 2% amid rising geopolitical risk premiums. Traders are balancing fears of a potential supply glut with escalating tensions in key oil-producing regions, making for cautious trading ahead of the Federal Reserve’s policy meeting later this week.
Geopolitical Risks Push Oil Higher
Markets reacted to increasing geopolitical uncertainty, which has been a major driver of oil price volatility. Key developments include:
- U.S. President Donald Trump announced a naval “armada” deployment toward the Middle East amid heightened tensions with Iran.
- Concerns persist that any conflict with Tehran could disrupt shipments from one of the world’s major oil producers.
- Previous disputes, including tensions over Greenland, have also unsettled global markets, indirectly influencing crude prices.
On the supply side, some relief emerged as Kazakhstan’s primary export route returned to full capacity. The Caspian Pipeline Consortium confirmed that operations at its Black Sea terminal resumed normal exports following repairs to a mooring point. This temporarily eased concerns about immediate supply disruptions.
Supply Surplus Fears and Fed Watch
Despite geopolitical support for oil, investors remain wary about potential oversupply in 2026. Non-OPEC producers continue robust output, raising questions about whether global demand can keep pace with production.
Market focus now shifts to the Federal Reserve’s upcoming meeting:
- Policymakers are expected to hold U.S. interest rates steady.
- Investors will monitor guidance for hints on potential rate cuts later this year.
- Rate expectations influence oil demand indirectly through the U.S. dollar and economic growth outlook.
Overall, while short-term volatility is driven by geopolitical events, the medium-term oil market outlook remains cautious as supply dynamics and global economic signals continue to evolve.
Bullet Summary for Quick Read:
- Brent crude: $65.84/barrel; WTI: $61.03/barrel.
- Geopolitical tensions, particularly with Iran, support prices.
- Kazakhstan exports back to normal, easing immediate supply concerns.
- Investors await Fed guidance on rates and economic growth.
- Oversupply fears persist for 2026 if demand lags production.
