Summary:
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Oil settles at seven-week highs, extending mid-January rally
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Iran export risks support prices amid protest crackdown
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Venezuela supply return caps upside
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Russia, Azerbaijan add background supply risk
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Volatility dominates despite surplus outlook
Oil climbed as Iran-related supply risks outweighed expectations of returning Venezuelan barrels, gains seen since mid-last week.
Oil prices climbed to their highest levels in around seven weeks on Monday, extending gains that began in the middle of last week as markets weighed escalating geopolitical risks against the prospect of additional sanctioned supply returning to the market.
Brent crude settled up 0.8% at $63.87 a barrel, its highest close since mid-November, while U.S. WTI rose 0.6% to $59.50, the strongest settlement since early December. The advance reflects growing concern that Iran’s oil exports could be disrupted as authorities crack down on nationwide anti-government protests.
Tensions surrounding Iran intensified after President Donald Trump said Washington was weighing responses to the crackdown, including the possibility of talks with Iranian officials while also threatening military action. Although Tehran said it is keeping communication channels open, traders focused on the risk that sanctions enforcement or security concerns could curb shipments.
Data from tanker-tracking firms show Iran currently holds a record volume of crude on the water, around 50 days of output, highlighting both export challenges and the vulnerability of flows should tensions escalate. Reduced Chinese buying due to sanctions has added to uncertainty around near-term supply.
Offsetting those concerns are expectations that supply could rise from Venezuela, where oil exports are set to resume following the ouster of President Nicolás Maduro. The U.S. has signalled that up to 50 million barrels of sanctioned Venezuelan crude could be transferred, with trading houses already lining up vessels to restart shipments
