Oil prices fell on Monday after a 6% gain last week, but supply concerns amid rising tensions between Western powers and major oil producers Russia and Iran kept a floor under prices.
Brent crude futures were down 43 cents, or 0.57%, to $74.74 a barrel by 0705 GMT, while WTI crude futures were down 51 cents, or 0.73%, to $70.73 a barrel.
Both contracts posted their biggest weekly gains since late September last week. They reached their highest payout levels since Nov. 7 after Russia launched a hypersonic missile at Ukraine as a warning to the U.S. and Britain following Kyiv’s attacks on Russia.
Tensions between Ukraine and Russia have recently climbed significantly, adding to prices. Oil prices are starting the new week on a slight decline as market participants await further clues from geopolitical developments and the Fed’s policy outlook.
Tensions are expected to continue through the end of the year, with Brent prices expected to be supported around $70-$80.
Iran also reacted to a decision by the UN nuclear watchdog on Thursday.
The IAEA’s condemnation and Iran’s response raise the possibility that Trump will impose sanctions on Iran’s oil exports when he comes to power. There is talk of suspending Iran’s oil exports by about 1 million barrels daily, or about 1% of the global oil supply.
Iran’s foreign ministry said on Sunday that it would hold talks with three European powers on November 29 over its controversial nuclear program.
Markets are concerned not only about the damage to oil ports and infrastructure but also about the possibility of more countries getting involved in conflicts.
Investors also focused on rising crude demand in China and India, the world’s largest and third-largest importers. China’s crude imports are expected to recover in November. India’s refining capacity rose 3% year-on-year in October.
China’s crude imports are likely to rise further as independent refiners are granted at least 5.84 million metric tons (116,800 bpd) of additional import quotas for future cargoes through next year, people familiar with the matter said on Monday.
Throughout the week, traders will be watching U.S. personal consumption expenditures (PCE) data on Wednesday, which will likely inform the Federal Reserve’s policy meeting scheduled for Dec. 17-18.
