West Texas Intermediate (WTI) oil prices regained ground on Monday, trading around $70.10 per barrel during the Asian session after recent losses. The recovery was driven by escalating geopolitical tensions between US President Donald Trump and Ukrainian leader Volodymyr Zelenskyy, reigniting concerns over the Russia-Ukraine conflict.
US-Ukraine Rift Fuels Supply Concerns
The heated exchange between Trump and Zelenskyy occurred during peace deal negotiations, where Zelenskyy was expected to sign an agreement granting the US expanded access to Ukraine’s rare earth minerals. The plan collapsed following the confrontation, with top US advisers reportedly asking Zelenskyy to leave the White House.
The diplomatic fallout has added to uncertainty surrounding the ongoing Russia-Ukraine conflict, heightening concerns over potential disruptions in global energy supplies and boosting crude oil prices.
Trade Tensions Cap Oil’s Upside
Despite the geopolitical boost, oil’s upside remains limited amid rising fears of weaker global demand due to escalating US-China trade tensions. Over the weekend, Trump announced an additional 10% tariff on Chinese imports, set to take effect Tuesday, following a similar tariff hike last month. Additionally, Trump confirmed that 25% tariffs on Canadian and Mexican goods will be imposed from March 4.
The renewed trade disputes could weigh on global economic growth and reduce demand for crude oil, capping further price gains.
Iraq-Turkey Pipeline Uncertainty
On the supply front, Turkey’s Energy Minister Alparslan Bayraktar indicated on Sunday that Turkey aims to restore full capacity operations of the Iraq-Turkey oil pipeline through the Ceyhan terminal. However, eight international oil companies operating in Iraq’s Kurdistan region announced on Friday that they would not restart exports through Ceyhan, despite Baghdad’s signal that operations would resume soon.
The uncertainty surrounding the pipeline’s operations adds another layer of complexity to the global oil supply outlook, leaving the market sensitive to further geopolitical and trade-related developments.
As geopolitical risks mount and trade tensions persist, oil prices are likely to remain volatile, with market attention focused on diplomatic negotiations and global demand forecasts.
