Oil Prices Slip as Iran and Venezuela Supply Fears Ease

Oil prices declined on Monday as investors reacted to easing supply concerns from two key OPEC producers, Iran and Venezuela. The dip follows a significant rally last week driven by escalating geopolitical tensions.

By 1248 GMT, Brent crude futures were down 0.2%, or 15 cents, to $63.19 a barrel. West Texas Intermediate (WTI) crude saw a similar decline, falling 0.3%, or 19 cents, to $58.93 a barrel.

According to UBS analyst Giovanni Staunovo, the downward pressure comes from "lower European equity markets and lack of additional supply disruptions" after a strong performance at the end of the previous week. Both benchmarks had surged over 3% last week, marking their largest weekly gain since October.

Iran Asserts Control, Calming Oil Markets

A primary factor easing market jitters is the situation in Iran. The government announced on Monday that it had regained "total control" following the most significant anti-government demonstrations since 2022.

The statement from Foreign Minister Abbas Araqchi helped calm fears of an immediate supply shock from the region. The recent civil unrest, in which a rights group reported over 500 people were killed, had prompted a sharp crackdown from Iran's clerical establishment.

The situation had drawn international attention, with U.S. President Donald Trump warning of potential military intervention. A U.S. official confirmed that Trump is scheduled to meet with senior advisers on Tuesday to discuss options regarding Iran.

Despite the heightened tensions, market analysts believe a significant risk premium has not yet been fully priced in. "The market is saying, 'Show me the disruption to supply', before materially responding," said Saul Kavonic, head of energy research at MST Marquee, suggesting that traders are waiting for a tangible impact on oil shipments through the Strait of Hormuz.

Venezuela's Potential Return to Oil Exports Adds Pressure

Adding to the potential for increased global supply, Venezuela is expected to resume oil exports soon after the ouster of President Nicolas Maduro. President Trump announced last week that Caracas is prepared to turn over as much as 50 million barrels of sanctioned oil to the United States.

This development has initiated a logistical race among oil companies. According to four sources familiar with the matter, firms are scrambling to secure tankers and prepare for the complex operations required to ship crude from Venezuela's vessels and aging ports. In a White House meeting on Friday, trading house Trafigura stated its first vessel is expected to load within the next week.

Analysts See Supply Surplus, But Geopolitical Risks Remain

Looking ahead, investment bank Goldman Sachs forecasts that oil prices are likely to trend lower this year. In a note released Sunday, the bank projected that a wave of new supply will create a market surplus.

However, Goldman Sachs also warned that volatility will persist due to ongoing geopolitical risks tied to Russia, Venezuela, and Iran. Investors continue to monitor potential supply disruptions from Russia amid Ukrainian attacks on its energy infrastructure and the possibility of stricter U.S. sanctions.

The bank maintained its average price forecasts for 2026 at $56 per barrel for Brent and $52 per barrel for WTI. It expects prices to hit a bottom in the final quarter of the year at $54 for Brent and $50 for WTI as inventories in OECD countries build up.