Brent–WTI Rebound, But War Premium Begins to Fade
Oil prices rose at the start of the European session on Friday (February 6th), but remained on track for their first weekly decline in nearly two months. Market participants were holding their breath ahead of the US–Iran talks in Oman, which could determine whether the geopolitical risk premium will fade further—or rebound.
In the European session, Brent held around $68.33/barrel, while WTI hovered around $64.09/barrel. This daily gain followed a sharp decline the previous day, but was not enough to salvage the weekly performance: Brent is still headed for a decline of around 3.3% this week, while WTI is down around 1.8%.
The main cause of the weekly pressure came from easing concerns about an imminent military conflict. Confirmation of the US–Iran negotiation schedule has led the market to assess the risk of an attack that could disrupt oil infrastructure as less, leading some of the previously established “war premium” to be reduced.
But tensions have not yet fully subsided. Analysts believe the two sides' agendas remain significantly different, making the outcome of the negotiations difficult to predict and keeping the market vulnerable to headlines. Iran wants to focus on the nuclear issue, while the US is pushing for broader discussions—this is what is keeping oil volatility high.
ANZ believes this "difference of opinion" means the geopolitical risk premium will persist. This means that as long as the talks don't produce a clear signal, oil prices could easily fluctuate wildly: positive news depresses prices (risk premium falls), while negative news immediately triggers a spike (risk premium rebounds).
Beyond geopolitics, the market is also starting to look back at supply fundamentals. Reuters highlights that oversupply concerns still loom, and if Middle East tensions continue to ease, market focus could quickly shift to the issue of "adequate" global supply—which could potentially hold back the oil rally further.
Source: Newsmaker.id
