Oil edged higher as traders monitored geopolitical risks before talks between the US and Iran that are expected to resume on Tuesday.
Brent traded above $68 a barrel after its first back-to-back weekly drop this year, while West Texas Intermediate neared $64. Iran’s Revolutionary Guard are conducting naval drills in the “region of” the Strait of Hormuz, the vital waterway that ships about a fifth of the world’s barrels, according to the nation’s semi-official Tasnim news agency.
US President Donald Trump said Friday that regime change would be the best outcome for Iran, ratcheting up pressure on Tehran ahead of negotiations in Geneva.
Volumes have so far proven thin, with holidays in the US and Canada on Monday and China’s Lunar New Year all week.
Oil has rallied more than 10% 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 global glut. Futures have pared some of their gains as the risk of an imminent strike faded and after the International Energy Agency trimmed its demand growth forecast for this year.
“The US and Iran are set to resume talks on Tuesday in Geneva and the crude oil market is sitting idle awaiting what might come out of it,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “When/if the Iranian tension eventually fades, we’ll likely see Brent crude trailing back down to the $60” level and below.
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. Drone strikes on the Black Sea coast over the weekend damaged infrastructure at the Taman seaport and fuel tanks.