Oil Steadies as Geopolitical Risks Offset Supply Surplus Fears

Oil prices held near recent highs on Monday after last week’s sharp gains, as markets balanced rising geopolitical tensions against lingering concerns of a potential global supply glut.

Brent crude slipped 0.1% to $65.84 a barrel, while U.S. West Texas Intermediate eased 0.1% to $61.03. Both benchmarks had jumped more than 2% on Friday, driven by a surge in geopolitical risk premiums.

Sentiment remained supported after President Donald Trump said a U.S. naval “armada,” including an aircraft carrier group, was heading toward the Middle East amid rising tensions with Iran. Any conflict involving Tehran could disrupt shipments from one of the world’s major oil producers, keeping traders on edge.

At the same time, supply-side pressure eased slightly after Kazakhstan restored operations at its main export route. The Caspian Pipeline Consortium confirmed that repairs at its Black Sea terminal were completed, allowing crude exports to return to normal levels.

Despite these near-term supports, investors remain cautious. Concerns persist that oil markets could face an oversupply later this year if production growth—especially from non-OPEC producers—outpaces demand.

Attention now turns to the Federal Reserve’s policy meeting this week. While rates are expected to remain unchanged, markets will scrutinize the Fed’s guidance for clues on when cuts may begin, given their potential impact on economic growth, the dollar, and ultimately, oil demand.