BY COMFORT OGBONNA
Oil prices were little changed on Monday as investors carefully weighed the potential impact of renewed diplomatic talks between the United States and Iran against expectations that OPEC+ could soon increase supply. The cautious tone reflected uncertainty over whether geopolitical tensions would ease or escalate in the coming weeks.
Brent crude futures slipped 18 cents, or 0.3%, to $67.52 a barrel by mid-morning trading, while U.S. West Texas Intermediate crude edged down 17 cents to $62.72 a barrel. The muted price movement came amid thin trading conditions, with major markets in China, South Korea, and Taiwan closed for Lunar New Year holidays, alongside the Presidents Day holiday in the United States.
Last week, both benchmarks recorded declines, with Brent finishing roughly 0.5% lower and WTI losing about 1%. The pullback followed comments from U.S. President Donald Trump indicating that Washington could potentially reach an agreement with Tehran within the next month. Those remarks eased immediate fears of supply disruptions stemming from heightened geopolitical tensions.
The United States and Iran are scheduled to hold a second round of talks in Geneva on Tuesday, focusing on Tehran’s nuclear programme and efforts to avoid a renewed military confrontation. Market participants are closely monitoring the negotiations, as any breakthrough could lead to the easing of sanctions on Iranian oil exports, potentially increasing global supply.
An Iranian diplomat reportedly said over the weekend that Tehran is pursuing a nuclear agreement that would deliver economic benefits to both sides. Discussions could include cooperation in energy and mining investments as well as aircraft purchases, signaling that economic incentives are central to the negotiations.
However, the diplomatic track is unfolding alongside military preparations. The United States has reportedly dispatched a second aircraft carrier to the region and is preparing contingency plans for a sustained military campaign should the talks fail. Meanwhile, Iran’s Revolutionary Guards have warned that any strikes on Iranian territory would prompt retaliatory action against U.S. military bases in the region. These developments underscore the fragile nature of the negotiations and the potential for rapid escalation.
Analysts suggest that oil prices remain highly sensitive to headlines surrounding the talks. A significant deterioration in relations could send Brent crude toward $80 a barrel, reflecting fears of supply disruptions in the Middle East. Conversely, a successful diplomatic outcome that reduces tensions and allows more Iranian oil to return to global markets could pull prices closer to $60 a barrel.
Adding another layer of complexity is the stance of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+. The group is reportedly leaning toward resuming output increases from April, following a three-month pause in planned supply hikes. A decision is expected at its March 1 meeting.
If OPEC+ proceeds with boosting production, it could offset some of the upward pressure on prices stemming from geopolitical risks. The alliance has been carefully managing output to stabilize markets amid concerns over global demand growth and economic uncertainty. A return of additional barrels to the market, particularly if paired with a potential easing of sanctions on Iran, could tilt the balance toward a more comfortably supplied oil market in the second quarter.
For now, traders remain in wait-and-see mode. With limited liquidity due to global holidays and several high-stakes events on the calendar, oil markets are likely to remain sensitive to diplomatic signals, military developments, and policy decisions from major producers in the days ahead.
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