Oil prices moved higher on Monday as severe winter weather disrupted American crude production and military tensions with Iran created uncertainty in global markets. Brent crude futures rose 23 cents to reach $66.11 per barrel while West Texas Intermediate crude increased 19 cents to $61.26 per barrel.
Both oil benchmarks posted weekly gains of 2.7% on Friday, closing at their highest levels since January 14. The gains came after more than 2% increases in the previous trading session.
Winter storm Fern hit the US coast last week, forcing shutdowns across major crude and natural gas producing areas. The storm also put pressure on the power grid in affected regions.
JPMorgan analysts reported that approximately 250,000 barrels per day of crude production was lost due to harsh weather conditions. The Bakken field in Oklahoma and parts of Texas experienced production declines.
Priyanka Sachdeva, senior market analyst at Phillip Nova, said the storm forced shut-ins in major producing regions. She noted that oil markets are seeing upward movement as outages reduce physical oil flows.
Tensions between the United States and Iran continued to influence oil trading. President Donald Trump stated last week that the US has an armada heading toward Iran, though he expressed hope it would not need to be used.
Trump warned Tehran against killing protesters or restarting its nuclear program. The USS Abraham Lincoln has been deployed to the Middle East as part of this naval presence.
An SEB research note indicated that US threats toward Iran with the carrier deployment were likely more important to price movements than weather issues. Cold weather and higher heating oil demand also contributed to bullish trading.
On Friday, a senior Iranian official responded that Iran would treat any attack as an all-out war. This exchange kept traders watching for potential supply disruptions from the Middle East region.
Markets remain concerned that conflicts involving Iran could interrupt crude shipments. Iran is one of the world’s major oil producers.
Investors are also monitoring the Federal Reserve’s policy meeting scheduled for this week. Markets expect US policymakers to keep interest rates unchanged.
Traders will watch the Fed’s guidance for information about possible rate cuts later this year. Interest rate decisions can affect oil demand through their impact on economic growth and the US dollar.
Kazakhstan’s Caspian Pipeline Consortium announced it returned to full loading capacity at its Black Sea terminal on Sunday. The return followed completion of maintenance at one of its three mooring points.
Tengizchevroil, which runs Kazakhstan’s large Tengiz oilfield, began gradually resuming production on Monday after an extended outage.
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