Oil prices steady with focus on geopolitical risk before Iran talks
It has rallied about 10% this year as escalating tensions with Iran outshine concerns over a building glut
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[SINGAPORE/CAPETOWN] Oil was little changed at the start of the week of Feb 16, as traders monitor geopolitical risks before the talks between the US and Iran are expected to resume on Feb 17.
Brent traded close to US$68 a barrel, after its first back-to-back weekly drop this year, while West Texas Intermediate was near US$63.
US President Donald Trump said on Friday that regime change would be the best outcome for Iran, ratcheting up pressure ahead of the negotiations in Geneva.
Oil has rallied about 10 per cent this year as escalating tensions with Iran, and potential supply disruptions in a region that pumps about a third of the world’s crude, outshone concerns over a building glut.
Futures have pared some of those gains, as the risk of an imminent strike faded and after the International Energy Agency trimmed its demand growth forecast for this year.
Robert Rennie, head of commodity and carbon research at Westpac Banking, said: “While geopolitics is providing near-term support, the supply picture is set to roar back as a driver for crude in the months ahead.
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“We still expect Brent to eventually slide back into the low US$60, as we move through H1 this year and rising global production starts to weigh on prices.”
US-led talks to end the war in Ukraine are also scheduled to start in Geneva on Tuesday, though the prospects of a speedy end to the almost four-year-old conflict and the return of Russian barrels look slim.
The drone strikes on the Black Sea coast over the weekend damaged infrastructure at Taman seaport and fuel tanks.
Elsewhere, some Opec+ members said they envisage scope to resume output increases in April, believing glut concerns are overblown, although the group has not committed to action ahead of its Mar 1 meeting.
The ultimate decision may depend on whether Trump launches military strikes against – or reaches a nuclear deal with – Organization of the Petroleum Exporting Countries member Iran, one delegate said. BLOOMBERG
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