Oil Prices Drop as Market Shifts Focus to Supply Surplus Forecasts

SadaNews - Oil prices fell as traders focused on forecasts of a supply surplus, while the market monitored the impact of a widespread winter storm that hit the United States.

West Texas Intermediate crude for March delivery dropped by 0.6% to $60.25 per barrel as of 1:20 PM Singapore time, while Brent crude for March settlement fell by 0.7% to trade at $65.15 per barrel.

Kazakhstan's largest oil producer is preparing to resume production at the giant Tengiz field, while Chevron is working to increase shipments of Venezuelan crude to a market apprehensive about a surplus in supplies.

Limited Disruptions in America and Market Stabilization

In the United States, weather conditions have disrupted several refineries on the Gulf Coast, but the impact is expected to be short-lived. On the other hand, natural gas futures fell on Tuesday after a strong surge driven by a cold wave.

Haris Khursheed, Chief Investment Officer at Karobaar Capital, stated: "Winter storms typically affect the oil market through short-term disruptions in logistics and refining operations, not in core demand."

He added: "Unless inventories have already been depleted, the impact usually fades once operations return to normal."

Iran Tensions Add Risk Premium

Although oil futures registered an increase at the beginning of 2026, forecasts indicate that supply will exceed demand this year.

The OPEC+ alliance is set to meet at the end of this week to review production policy decisions for the next month, amid expectations to adhere to plans to freeze production increases. A delegate from the alliance stated that there are currently no indications of a need to respond to developments in member countries, such as Venezuela and Iran.

Meanwhile, U.S. President Donald Trump has once again highlighted Iran, renewing his threats against Tehran's leadership following a crackdown targeting protesters against Supreme Leader Ali Khamenei's government. The American president also deployed naval assets to the Middle East, adding a degree of risk premium to oil prices.