Brent crude hovers at $67 per a barrel Oil as OPEC output falls in January on lower supply from Nigeria, Libya

Oil prices declined on Monday, driven by signals that regional tensions may be easing after announcements that negotiations between Washington and Tehran over Iran’s nuclear program will continue.

Meanwhile OPEC’s oil output fell in January due to lower supply from Nigeria and Libya, a Reuters survey found on Monday, which offset increases in members including Venezuela after the U.S. capture of Nicolas Maduro and the ending of an oil blockade.

The Organization of the Petroleum Exporting Countries pumped 28.34 million barrels per day in January, down 60,000 bpd from December’s total, the survey showed, with Nigeria posting the largest decline.
OPEC+, comprising OPEC and allies including Russia, in January began a first-quarter pause of its monthly output increases amid concerns of a supply glut.

Many members are running close to capacity limits and some are tasked with extra cuts to compensate for earlier overproduction, which has limited the impact of the increases.

Under an agreement by eight OPEC+ members covering January output, the five of them that are OPEC members – Algeria, Iraq, Kuwait, Saudi Arabia and the UAE – were to keep output unchanged before the effect of compensation cuts totaling 130,000 bpd for Iraq and the UAE.

The survey shows that they increased output by 60,000 bpd month on month, but total output remained below their targets.

Nigeria had OPEC’s largest output decline, and Libyan supply also fell as bad weather impacted loadings, the survey found.

Iranian crude supply fell further. Iran is subject to U.S. sanctions that seek to curb its oil exports over its nuclear work, and new measures were announced in January over Tehran’s crackdown on protesters

Brent crude traded at $67.09 per barrel, down 0.8% from the previous close of $67.66. US benchmark West Texas Intermediate decreased 0.8% to $62.76 per barrel, compared with $63.31 in the previous session.

US President Donald Trump described the indirect talks held between Iran and the US in Muscat, the capital of Oman, as “very good,” saying Tehran had strongly demonstrated its willingness to reach a new agreement.

Expressing satisfaction with the initial round of talks in Muscat, Trump said: “Today we had very, very good talks with Russia and Ukraine, and likewise, we had very good talks with Iran. It looks like Iran wants to make a deal, and they want it very much.”

Recalling that a large naval force had been dispatched to the region in response to Iran, Trump added, “It will be there soon. We’ll see how this turns out.”

Iranian President Masoud Pezeshkian also said the talks with the US marked a step forward.

These developments weakened perceptions of regional tension surrounding Iran, one of the world’s largest oil producers located on the Strait of Hormuz, a critical route for global crude supplies, thereby exerting downward pressure on oil prices.

Meanwhile, Trump signed an executive order allowing the imposition of additional tariffs on goods imported from countries that directly or indirectly purchase goods or services from Iran.

Under the order, the US may apply an additional 25% tariff on products imported from countries that source goods or services from Iran, either directly or indirectly.
Separately, Federal Reserve (Fed) Vice Chair Philip Jefferson said he was “cautiously optimistic” about the outlook for the US economy, noting that strong productivity growth could help bring inflation back to the Fed’s target.

San Francisco Fed President Mary Daly also said she believed one or two additional interest rate cuts might be needed to counter weakness in the labour market.
Amid these developments, the yield on the US 10-year Treasury rose by 2 basis points to 4.23%, while the dollar index remained flat at 97.6. Expectations that the Fed will continue cutting interest rates helped limit the decline in prices.