Onome Amuge
Oil prices eased on Monday, giving back a small portion of last week’s gains as investors balanced mounting geopolitical risks against concerns over a potential supply glut and awaited guidance from a pivotal Federal Reserve meeting.
Brent crude for March delivery slipped 0.2 per cent to $64.97 a barrel, while West Texas Intermediate fell 0.3 per cent to $60.91. Both benchmarks had risen by more than 2 per cent on Friday, buoyed by a sharp rise in geopolitical risk premiums.
Market nerves were heightened after Washington signalled a more assertive military posture in the Middle East. President Donald Trump said an “armada” of US naval forces, including an aircraft carrier group, was being deployed to the region amid rising tensions with Iran, stoking fears that any confrontation involving Tehran could disrupt crude flows from a key producing area. Oil markets have also been unsettled by broader geopolitical tensions involving the US, including recent rhetoric over Greenland, which has weighed on wider financial sentiment.
On the supply side, some downward pressure on prices eased after Kazakhstan restored operations on its main export route. The Caspian Pipeline Consortium said loading at its Black Sea terminal had returned to full capacity following repairs at a damaged mooring point, allowing exports to resume at normal levels.
Despite the tense geopolitical backdrop, investors remain wary of the medium-term outlook. Concerns persist that global oil markets could tip into oversupply later this year if production growth continues to outpace demand, particularly as output from non-Opec producers remains robust.
Attention is now focused on the Federal Reserve’s policy meeting this week, where US central bankers are widely expected to leave interest rates unchanged. Markets will scrutinise the Fed’s forward guidance for signals on the timing of potential rate cuts, with monetary policy expectations influencing oil demand through their impact on economic growth and the strength of the dollar.
Meanwhile, Opec+ is expected to maintain its pause on output increases for March at a meeting on Sunday, according to Reuters. The group’s decision follows an 8 per cent rise in oil prices so far this month, lifting crude above $66 a barrel despite lingering fears that excess supply could weigh on the market.
The meeting of eight Opec+ members, which together account for roughly half of global oil production, comes after the alliance agreed to raise output targets by about 2.9mn barrels a day from April to December 2025, equivalent to nearly 3 per cent of global demand. Monthly increases were paused for January to March amid weak demand forecasts and signs of market fragility.
