TLDR
- Brent crude rose to $66.11 and WTI reached $61.26 on Monday following 2% gains from Friday’s session
- Winter storm Fern shut down 250,000 barrels per day of US oil production in Texas and Oklahoma
- Trump deployed US naval forces toward Iran, increasing fears of Middle East supply disruptions
- Kazakhstan’s Caspian Pipeline Consortium restored full export capacity at Black Sea terminal
- Federal Reserve meeting this week could impact oil demand through interest rate policy decisions
Oil prices continued their upward trend on Monday as winter weather shut down American production facilities and heightened military tensions with Iran rattled global energy markets. Brent crude futures added 23 cents to trade at $66.11 per barrel while West Texas Intermediate crude climbed 19 cents to $61.26 per barrel.
Both benchmarks ended the previous week with 2.7% gains, reaching their strongest levels since January 14. The increases followed strong Friday trading that saw both contracts rise more than 2%.
Winter storm Fern swept through the US Gulf Coast region last week, forcing operators to halt production at wells and processing facilities. The extreme weather also strained electrical grids across impacted areas.
Analysts at JPMorgan calculated that harsh weather conditions eliminated roughly 250,000 barrels per day from US output. Fields in Oklahoma’s Bakken region and multiple Texas locations experienced the largest production drops.
Priyanka Sachdeva from Phillip Nova explained that the storm created shut-ins across key producing zones. The reduced physical supply flows are supporting price increases in current trading.
Middle East Tensions Support Price Gains
Growing friction between Washington and Tehran added another layer of support for oil values. President Trump announced last week that American naval forces are moving toward Iranian waters.
The deployment includes an aircraft carrier group and other military vessels. Trump warned Iran against harming protesters or advancing nuclear weapons development.
SEB analysts wrote that military posturing toward Iran likely had more impact on prices than weather-related issues. The USS Abraham Lincoln carrier strike group has been sent to the Middle East theater.
Iranian officials responded firmly on Friday, warning that any military action would be considered an act of war. Traders remain focused on potential supply disruptions from the region.
Iran ranks among the world’s top crude producers. Any conflict involving the country could reduce available oil supplies to international markets.
Supply Developments and Fed Policy Ahead
The Caspian Pipeline Consortium announced Sunday that its Black Sea terminal returned to maximum loading capacity. Maintenance work on one mooring point has been completed.
Tengizchevroil stated Monday that production at Kazakhstan’s Tengiz oilfield is slowly restarting. The facility had been offline for an extended maintenance period.
Market participants are now watching the Federal Reserve’s policy meeting scheduled for this week. Economists expect the central bank to maintain current interest rates.
Fed guidance on future rate cuts will be closely analyzed by oil traders. Rate policy affects crude demand through its influence on economic activity and dollar strength.
Concerns about potential oversupply later in 2026 persist among market watchers. Non-OPEC production growth could outpace consumption if demand remains weak.
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Source: https://blockonomi.com/oil-markets-rally-on-us-production-cuts-and-iran-military-tensions/