Iran Tensions Ease, Oil Prices Correct, Trump Opens New Chapter
Oil prices fell slightly as tensions over Iran began to ease, while market participants weighed the impact of US President Donald Trump's maneuvers that re-ignited the Greenland issue. Brent briefly fell below $64 per barrel, reflecting a market beginning to reduce the geopolitical risk premium that had boosted prices last week.
Over the weekend, there was no major escalation that actually led to supply disruptions from Iran—the very thing traders had feared most. Iranian Supreme Leader Ayatollah Ali Khamenei acknowledged for the first time that several thousand people had been killed in anti-government demonstrations this month. While he accused the US and Israel of involvement, he also asserted that Iran had no intention of escalating the situation to war.
Meanwhile, global market attention shifted to Europe after Trump announced tariff threats against several European countries over Greenland. Risk sentiment weakened: European stocks fell, while gold and silver hit records as investors sought safe havens.
Fundamentally, oil has been under pressure for the past few quarters due to concerns that supply is outpacing demand. The International Energy Agency estimates a potential oversupply of more than 3.8 million barrels per day this year. However, the risk of supply disruptions remains: largest oil producer Kazakhstan reportedly temporarily shut production at the Tengiz and Korolev fields as a precautionary measure after two fires at power plants. On the physical market side, the Brent timespread (the difference between the nearest and next month's contracts) has also almost doubled since the start of the year to around 70 cents per barrel, signaling that the short-term market remains tight.
"Despite pressure on fixed prices, short-term ICE Brent price spreads remain strong, indicating some tightness in the physical spot market," ING Groep NV wrote in a note. Trading volumes are also expected to be lighter due to the US market holiday.
For the latest movements, Brent for March delivery fell 0.8% to $63.64 per barrel at 11:16 a.m. in London. Meanwhile, WTI for February delivery fell 0.8% to $58.94 per barrel. (alg)
Source: Newsmaker.id
