Oil edged higher as traders assessed US President Donald Trump’s statement that the US had reached a “framework” for a deal on Greenland.
West Texas Intermediate rose less than 1% to settle below $61 a barrel, following equities and the dollar higher. Trump said he would refrain from previously threatened tariffs on European nations opposing his effort to take possession of Greenland. The US’s renewed push to acquire the sovereign Danish territory threatened to trigger a trade war that could curb economic growth and bring down oil prices.
Markets also digested renewed concerns over military action in Iran, adding to a geopolitical risk premium that further supported prices. Trump is still pressing aides on “decisive” military options in Iran, the Wall Street Journal reported Tuesday.
Reaction in the oil markets has appeared relatively muted, said Frank Monkam, head of macro trading at Buffalo Bayou Commodities.
“The price action today is basically range trade with an upside bias where dips are being bought until we get clarity on Iran, which has taken a backseat to Greenland/Davos talks for now,” Monkam said.
Helping add a floor to the market, the IEA increased its forecast for global oil demand growth in 2026, slightly trimming a projected supply glut that has weighed on prices. The projections, however, still leave oil markets facing a significant excess.
Stockpiles are on track to swell by 3.7 million barrels a day this year, according to the IEA’s latest assessment, though the agency has cautioned that the actual overhang may not reach these levels in practice. The excess supply has cushioned against uncertainties in Iran, Russia, Kazakhstan, and Venezuela, the agency added.
In Kazakhstan, the operator of the Tengiz oilfield has declared force majeure on crude deliveries into the Caspian Pipeline Consortium, adding a hurdle that has offered some support to prices, though previously existing issues in the CPC that had hampered the country’s supply appear to be nearing resolution.
Bitterly cold weather in the US is also leading the energy complex higher. Diesel futures settled 4% higher, another sharp increase following dramatic spikes in natural gas.
Oil Prices
WTI for March settlement rose 0.4% to settle at $60.62 a barrel in New York.
Brent for March settlement added 0.5% to settle at $65.24 a barrel.
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