Oil Prices Rise with Biggest Monthly Gains in Years Despite Today's Drop
Oil prices saw a decline of more than 1% today, Friday, from their highest levels in several months, but they are on track to record the biggest monthly gains in years, amid rising geopolitical concerns over a potential U.S. attack on Iran that could threaten global supplies.
By 03:32 GMT, Brent crude fell 91 cents to $69.80 a barrel after rising 3.4% yesterday, marking its highest level since July 31.
The most traded April contracts dropped by $1.07 to $68.52.
Meanwhile, U.S. West Texas Intermediate crude lost $1.06 today to reach $64.36 after rising almost the same percentage yesterday to its highest level since September 26.
Anne Pham, senior analyst at the "London Stock Exchange Group," said:
"Today's decline came after the significant rise last night, as expectations regarding an attack on Iran and the closure of the Strait of Hormuz have not yet materialized."
Tensions are escalating in the Middle East with a U.S. military buildup, amid warnings from President Donald Trump to Iran to come to the negotiating table or face a potential attack, prompting Tehran to threaten a strong response.
In another economic context, the dollar rose to reduce its weekly losses after Trump announced his intention to reveal his nominee for the Federal Reserve chair, amid optimism about avoiding a government shutdown in Congress.
On a monthly level, both oil grades are on track to record their first gains in 6 months, with Brent rising by 14.7%, marking its largest jump since January 2022, while West Texas Intermediate rose 12% in its biggest monthly gains since July 2023.
In Washington, the Trump administration is hosting senior defense and intelligence officials from Israel and Saudi Arabia to discuss the situation regarding Iran, amid expectations of limited military options if any confrontation occurs.
According to J.P. Morgan, rising inflation and the midterm elections make long-term disruptions in oil supplies unpredictable, even in the event of a potential attack on Iran, focusing on specific operations to avoid oil infrastructure.
Meanwhile, Citibank sees a 70% chance that the U.S. and Israel will take limited actions, including possibly seizing Iranian oil tankers.
On the global supply front, disruptions in Kazakhstan, Russia, and Venezuela affected about 1.5 million barrels per day in January, in addition to a cold weather wave in the U.S. expected to reduce production by about 340,000 barrels per day this month.
Kazakhstan announced the phased restart of the "Tengiz" oil field after a series of unexplained fires affected the production of 7.2 million barrels.
Weather conditions have also impacted Russian oil exports, while Venezuela was forced to cut production after the ousting of President Nicolas Maduro at the beginning of the new year.
Markets are on alert, and investors are closely monitoring geopolitical developments, with expectations of continued volatility in oil prices in the coming days.
