Oil prices stabilized and remained broadly steady on Monday following last week’s decline, as markets paused ahead of a second round of talks between the US and Iran.
Caution dominates sentiment as the market remains exposed to any developments in these talks.
Any signs of de-escalation could diminish the geopolitical risk premium and push prices to the downside.
Conversely, a breakdown in negotiations could quickly restore concerns about oil supplies from the Middle East, potentially fuelling gains in crude prices.
Meanwhile, the market could see its upside potential capped by supply-side headwinds. OPEC+ could potentially resume output increases starting in April, as the organisation’s members could move toward capturing additional market share. OPEC’s output freeze until now has helped the market find a floor.
An increase in production levels could add to the current oversupply concerns and could push prices to the downside again. The International Energy Agency (IEA) projects an excess of over 3.7 million barrels per day in 2026.
