Oil Steady With Focus on Geopolitical Risk Before Iran Talks

(Bloomberg) — Oil was little changed at the start of the week, as traders monitored geopolitical risk before talks between the US and Iran are expected to resume on Tuesday.

Brent traded below $68 a barrel, after its first back-to-back weekly drop this year, while West Texas Intermediate was near $63. US President Donald Trump said Friday that regime change would be the best outcome for Iran, ratcheting up pressure ahead of the negotiations in Geneva.

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Oil has rallied about 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 building glut. Futures have pared some of those gains as the risk of an imminent strike faded and after the International Energy Agency trimmed its demand growth forecast for this year.

“While geopolitics is providing near-term support, the supply picture is set to roar back as a driver for crude in the months ahead,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. “We still expect Brent to eventually slide back into the low $60s as we move through H1 this year and rising global production starts to weigh on prices.”

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 Taman seaport and fuel tanks.

Elsewhere, some OPEC+ members said they see scope to resume output increases in April, believing glut concerns are overblown, although the group hasn’t committed to action ahead of its March 1 meeting. The ultimate decision may depend on whether Trump launches military strikes against — or reaches a nuclear deal with — OPEC member Iran, one delegate said.