Oil prices are poised for their biggest monthly gain in years despite falling, fueled by geopolitical risks
Oil prices fell more than 1% from their recent highs on Friday, but are poised for their most significant monthly gain in years as a risk premium rises amid concerns that a potential U.S. attack on Iran could disrupt supply.
Brent crude futures fell 91 cents to $69.80 a barrel at 03:32 GMT, after closing 3.4% higher on Thursday, their highest level since July 31. The March contract expires on Friday. The more active April contract fell $1.07 to $68.52.
WTI crude oil fell $1.06 to $64.36 a barrel after rising 3.4% in the previous session to its highest level since September 26.
Prices fell after last night's rise as expectations of a possible attack on Iran and a blockade of the Strait of Hormuz did not materialize.
Tensions have escalated due to the US military buildup in the Middle East. On Wednesday, Trump warned Iran that it would face an attack or a nuclear deal, a threat that Tehran has spurred a strong response.
The dollar rose on Friday, recovering its weekly losses, after Trump said he would soon announce his nominee for Federal Reserve Chairman and optimism that Washington lawmakers would prevent a government shutdown.
Both benchmark oil prices are set to record their first monthly gains in six months; Brent crude is expected to rise 14.7%, its biggest jump since January 2022, while WTI crude is expected to rise 12% in January, its biggest monthly gain since July 2023.
According to sources, the Trump administration is hosting senior defense and intelligence officials from Israel and Saudi Arabia in Washington this week for separate talks on Iran. US officials say Trump is reviewing options but has not yet decided whether to attack Iran.
Given high inflation and this year's midterm elections, prolonged oil supply disruptions are not expected. If military action does occur, it is expected to avoid targeting Iran's oil production and export infrastructure.
In the short term, measured actions against Iran, including the seizure of oil tankers, are likely.
Disruptions in Kazakhstan, Russia, and Venezuela affected a total of 1.5 million barrels per day (bpd) of supply in January, while the Arctic weather system in the US is estimated to reduce crude oil and condensate production by 340,000 bpd this month.
On Wednesday, Kazakhstan announced it was gradually reactivating its Tengiz oil field and aims to reach full production within a week.
Bad weather conditions have affected Russian oil exports, while Venezuela has also been forced to cut production after U.S. forces ousted President Nicolas Maduro earlier this month.
The Trump administration on Thursday significantly eased sanctions on Venezuela’s oil industry; such moves could boost Venezuela’s oil and gas production and encourage investment.
Related Articles
Oil prices are rising as supply concerns increase amid expectations of a prolonged conflict in the Middle East
Oil prices continued to rise following US and Iranian attacks on ships serving their respective purposes
Oil prices closed higher this week following renewed US-Iran hostilities
