Global oil benchmarks posted modest gains in a quiet trading session on Monday, as market participants balanced geopolitical risks against potential supply increases from major producers. The trading day was characterized by thin volumes, with key financial centers in the United States and Asia closed for holidays.
Price Action and Market Conditions
Brent crude futures, the international benchmark, rose by forty-one cents to settle at $68.16 per barrel. This represented an increase of approximately 0.6%. Concurrently, U.S. West Texas Intermediate (WTI) crude advanced by forty-three cents to reach $63.32. Official settlement for WTI was absent due to the U.S. Presidents' Day holiday, a circumstance that can sometimes exaggerate short-term price movements.
The subdued activity was largely attributed to market closures. U.S. exchanges were shut for the federal holiday, while several major Asian markets, including China, South Korea, and Taiwan, were observing the Lunar New Year. This collective hiatus significantly reduced trading liquidity.
Key Market Drivers: Geopolitics and Supply
Analysts identified two primary focal points for energy traders. The first is a scheduled round of nuclear negotiations between the United States and Iran, set to commence on Tuesday in Geneva. The second is an upcoming meeting of the OPEC+ alliance—comprising the Organization of the Petroleum Exporting Countries and allies led by Russia—scheduled for March 1, where future production policy will be discussed.
The standoff between Washington and Tehran has injected a geopolitical risk premium into crude prices. Tamas Varga, an analyst at PVM, noted that fears of potential supply disruption from these tensions are providing underlying support to the market. The premium reflects trader anxiety over the possibility that a breakdown in diplomacy could lead to renewed sanctions or other actions that constrain Iranian oil exports.
Analyst Perspectives on Price Scenarios
Financial institutions are modeling a wide range of potential outcomes based on the Iran situation. Analysts at SEB outlined a scenario where escalating tensions could drive Brent prices as high as $80 per barrel. Conversely, a de-escalation and successful diplomatic resolution could see the benchmark retreat to around $60, as the current risk premium evaporates.
This creates a delicate balance for the market. Any strong signal that a deal is imminent could trigger a swift sell-off as the risk premium unwinds. However, if talks collapse, prices could rapidly readjust to reflect renewed supply risks, even before any physical barrels are removed from the market.
Producer Policy and Inventory Data Ahead
Simultaneously, traders are gauging the intent of the OPEC+ group. Market sources indicate the coalition is leaning toward resuming gradual output increases starting in April, following a three-month pause. A formal decision is expected at the March 1 meeting. Such a move, if confirmed, could cap the upside potential for prices in the medium term by adding more supply to the market.
Looking ahead, traders will also monitor the weekly U.S. crude inventory report from the Energy Information Administration, due for release on February 19. This data will provide a fresh snapshot of supply and demand fundamentals in the world's largest oil consumer.
Weekly Performance and Regional Flows
Despite Monday's gains, both major benchmarks recorded losses for the previous week. Brent declined by roughly 0.5%, while WTI fell by 1%. The weekly drop was partly influenced by remarks from former U.S. President Donald Trump, who suggested a potential deal with Iran could be reached within a month, momentarily easing market fears.
In related market developments, trade flow data indicates China is on track to set a third consecutive monthly record for imports of Russian oil in February. This increased purchasing is helping to offset a reported pullback in orders from India, as U.S. diplomatic pressure on buyers of Russian crude continues.
The immediate trajectory for oil prices remains tightly linked to the dual catalysts of geopolitics and producer policy. The outcome of the Geneva talks will determine the near-term risk sentiment, while the OPEC+ decision will shape the fundamental supply landscape for the second quarter.
