Oil Prices Decline as Supply Concerns Deflate

Oil Prices Decline as Supply Concerns Deflate

Oil prices declined in the global commodity market on Monday as supply concerns generated by the U.S. plan to attack Iran deflated sharply.

According to reports, US President Donald Trump had halted plans for a potential attack on Iran, easing worries about supply disruptions from the Middle East.

Brent crude traded at $63.83 per barrel, down around 0.5% from last Friday’s close of $64.13. US benchmark West Texas Intermediate (WTI) was at $59.13 per barrel, down around 0.5% compared with $59.44 last week.

Trump aborted planned military strikes against Iran due to a combination of diplomatic progress, logistical hurdles, and significant pushback from key regional allies, Axios reported Sunday.

“It was really close. The military was in a position to do something really fast,” a US official told the outlet, describing the intensity of the situation.

While the administration and various Middle Eastern countries expected an imminent operation following a Tuesday meeting, the order never came. Trump had initially narrowed down military options against Iranian targets but hesitated as complications surfaced.

One reason that influenced the reversal was a shift of US military assets toward the Caribbean and Asia that left the Middle East insufficiently prepared, with officials noting that “the theater was not ready,” limiting available options.

A decisive factor was a backchannel exchange between US envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi. On Wednesday morning, Araghchi reportedly messaged Witkoff, committing to stop the killing and halt the scheduled execution of protesters.

The developments eased market concerns over potential supply disruptions from Iran, putting downward pressure on oil prices.

Meanwhile, US markets will be closed on Monday for the Martin Luther King Jr Day holiday. Investors are also closely watching developments around Venezuela’s oil fields after Washington said it would take control of the country’s oil sector.

US Energy Secretary Chris Wright said Washington is moving as quickly as possible to grant Chevron an expanded license to produce oil in Venezuela, according to reports.

Credit rating agency Fitch Ratings said the geopolitical oil risk premium is likely to remain limited, citing a global supply surplus that could offset production uncertainty in Iran and Venezuela.

It said any potential disruptions from Iran could be absorbed by the market, while supply increases from Venezuela are expected to remain limited in the near term. FG Denies Siting Gold Refinery in Lagos