Key Points

• Global supply concerns supported higher crude prices.

• Geopolitical risks added a supply premium.

• Demand stability limited downside pressure.

At the beginning of the week, crude oil prices went up as traders weighed new supply risks against diplomatic developments related to the war in Eastern Europe. On Monday, Brent crude got closer to the $61 per barrel mark. This was because of rising geopolitical tensions and cautious optimism about talks between Washington and Kyiv.

Brent was worth about $60.87 per barrel, which is about 0.7 percent more than it was last Friday. The US benchmark West Texas Intermediate also went up by about the same amount, to $57.27 per barrel. People in the market said that the price movement showed a balance between short-term worries about supply and longer-term worries about too much output.

Geopolitics make the price of crude oil go up

US President Donald Trump said that progress had been made towards ending the Russia-Ukraine war after talking with Ukrainian President Volodymyr Zelenskyy. This news affected energy markets. Zelenskyy said the talks were useful and that there was a lot of agreement on most parts of a proposed peace framework, such as security guarantees and military arrangements.

Traders said that the possibility of easing hostilities could eventually lower the risks to supply that come with sanctions and transportation problems. Still, the market was cautious and participants were waiting for real results instead of talk. Any breakthrough could change the flow of goods from the area, but prices are still very uncertain.

Tensions in the Middle East make supply worries worse

At the same time, things that happened in the Middle East made things even riskier. Saudi air strikes in Yemen and comments by Iranian President Masoud Pezeshkian made people even more worried about the safety of supplies in the area. Iran said it was in a full-blown war with the US, Israel, and Europe, which made energy markets nervous.

Analysts said that the Middle East is still a very important place for oil prices to get risk premiums. Even if there are no direct problems, higher rhetoric can affect shipping costs, insurance rates, and how investors feel, all of which affect price changes.

Risks of oversupply slow down further gains

Even though there are problems right now, international organisations and market analysts still say that the world’s supply of oil could outstrip demand in 2026. Prices are likely to stay low because of rising non-OPEC output and lower expectations for demand growth.

US production signals backed up that idea. Baker Hughes’ data showed that the number of oil rigs in the US rose by three last week, bringing the total to 409. This suggests that production will stay steady in the short term. The count is still much lower than it was a year ago, which shows that producers are still being careful.

Energy analysts think that crude prices will stay in a range for the next few sessions. This is because of geopolitical risks, but it will be limited by structural supply growth and mixed demand signals.