NEW YORK: Oil prices edged up on Monday as investors weighed the market implications of upcoming US-Iran talks aimed at de-escalating tensions against a backdrop of expected OPEC+ supply increases.
Brent crude futures gained 73 cents, or 1.08 percent, to USD68.48 a barrel by 12:42 p.m. ET (1742 GMT).
US West Texas Intermediate crude was at USD63.61 a barrel, up 72 cents, or 1.14 percent. The contract will have no settlement on Monday, the US Presidents Day holiday.
Fears of supply disruption from the US-Iran tensions have helped keep oil prices stable, said PVM analyst Tamas Varga. Looming Lunar New Year holidays in China, South Korea and Taiwan were also dampening trade.
Last week, both benchmarks posted weekly declines with Brent settling about 0.5 percent lower and WTI losing 1 percent after comments from US President Donald Trump that Washington could make a deal with Tehran over the next month. The two countries are due to hold a second round of talks in Geneva on Tuesday over Tehran’s nuclear programme. In the run-up to the talks with Washington, mediated by Oman, Iran’s foreign minister met with the head of the IAEA, the UN nuclear watchdog, on Monday.
An Iranian diplomat was reported as saying that Iran is pursuing a nuclear agreement with the US that delivers economic benefits for both sides, with energy and mining investments and aircraft purchases up for discussion.
However, the US is preparing for the possibility of a sustained military campaign if the talks do not succeed, US officials have told Reuters. Iran’s Revolutionary Guards have warned that if there are strikes on Iranian territory, they could retaliate against any US military base. “Increased Iranian tension could drive Brent to USD80 a barrel. Fading tension would drop it back to USD60 a barrel,” SEB analysts said in a note.
While US-Iran tensions push up oil prices, the Organization of the Petroleum Exporting Countries and allies - together called OPEC+ - are dampening them by leaning toward a decision at their March 1 meeting to resume output increases from April after a three-month halt.
Oil prices were also supported by China’s continued strong crude imports and by some disruptions in oil exports, UBS oil analyst Giovanni Staunovo said.
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