Oil prices were mostly unchanged on Monday after posting strong gains in the previous session, as investors balanced fears of a potential supply surplus against rising geopolitical tensions. Markets also remained cautious ahead of a key policy meeting by the U.S. Federal Reserve later this week.
By late Monday trading, Brent crude futures for March delivery slipped 0.1% to $65.84 per barrel, while U.S. West Texas Intermediate (WTI) crude edged down 0.1% to $61.03 per barrel. Both benchmarks had climbed more than 2% on Friday, supported by a sharp increase in geopolitical risk premiums.
Oil supported by rising geopolitical tensions
Oil markets remained on alert after the United States signaled a tougher military stance in the Middle East. Donald Trump said an “armada” of U.S. naval forces, including an aircraft carrier strike group, was moving toward the region amid escalating tensions with Iran.
Investors fear that any confrontation involving Tehran could disrupt crude supplies from one of the world’s most important oil-producing regions. Broader geopolitical uncertainty, including recent tensions involving Greenland, has also unsettled global financial markets and supported oil prices.
Supply pressures ease, but surplus risks linger
On the supply side, some downward pressure on prices eased after Kazakhstan’s main crude export route returned to full capacity. The Caspian Pipeline Consortium said operations at its Black Sea terminal had been fully restored following repairs at a mooring point, allowing exports to resume at normal levels.
Despite the short-term support from geopolitics, concerns remain about the longer-term outlook. Analysts warn that global oil markets could face an oversupply later in the year if production growth continues to outpace demand, particularly as non-OPEC output remains strong.
Fed meeting in focus
Attention is now turning to the upcoming policy meeting of the Federal Reserve, where policymakers are widely expected to leave interest rates unchanged.
Investors will closely examine guidance from the central bank for signals on the timing of potential rate cuts later this year. Interest rate expectations are closely linked to oil demand, as they influence economic growth and movements in the U.S. dollar.
