Morning Highlights: Oil Falls 1% as Trump Signals Iran Dialogue; Brent Heads for Biggest Monthly Gain Since January 2022

Friday, January 30, 2026 | 6:15 AM EST

________________________________________

MARKET SNAPSHOT

Oil fell on signs the U.S. may engage in dialogue with Iran, reducing supply disruption concerns. Brent fell $0.68 (1%) to $70.03/bbl as the March contract expires today. The more active April contract lost $0.80 (1.15%) to $68.79/bbl. WTI declined as of 6:00 AM EST.

Monthly Performance: Despite Friday's decline, benchmark prices remain on track for large monthly gains. Brent is set for its biggest monthly jump since January 2022, and WTI is poised for its largest monthly gain since July 2023.

Key Reversal: Trump urged Iran Wednesday to make a nuclear deal or face attack but Thursday said he was planning to speak to the country's leaders, deflating the regime change strike premium that drove Brent to $70.35 yesterday.

________________________________________

TOP DEVELOPMENTS

Trump Pivots from Attack Threats to Dialogue

The whipsaw continues: Wednesday, Trump threatened Iran to make a nuclear deal or face attack. Thursday, Reuters reported he was considering targeted strikes on security forces and leaders to topple the regime. Thursday evening/Friday, he said he plans to speak with Iranian leaders.

Classic Pattern: This follows the established Trump playbook on Iran we've tracked all month: escalate → threaten → de-escalate. The $3-4/bbl Citi premium estimate that drove yesterday's rally to $70+ is evaporating as dialogue replaces strike plans.

Dollar Strengthens After Four-Year Low

Price pressure came from a rise in the dollar after it hit a four-year low earlier this week. Friday's gain followed Trump's announcement he would soon name his Federal Reserve nominee, easing government shutdown fears.

________________________________________

SUPPLY NORMALIZATION PRESSURES PRICES

"Rising U.S. crude oil output after shutdowns and Kazakhstan nearing resumption of production at Tengiz also contribute to the change in sentiment, and given the week's bullish performance, it is reasonable to expect some profit-taking ahead of the weekend," said an analyst.

U.S. production was expected to fully restore by today (January 30) from the 2M bpd peak Winter Storm Fern outage. Kazakhstan's energy minister targeted full Tengiz production (900K bpd) within a week from Wednesday's statement. The temporary supply disruptions that supported this week's rally are resolving.

Russian Refinery Maintenance: Peak maintenance periods for Russian primary oil refining this year are expected this month (January) and in September, based on Reuters calculations using industry source estimates.

January Russian refinery maintenance could temporarily reduce product exports while maintaining crude availability, potentially bearish for crude prices.

________________________________________

REUTERS POLL: OIL TO HOLD NEAR $60 IN 2026

Annual Forecast: A Reuters poll of 31 economists and analysts conducted in January forecast:

• Brent: Average $62.02/bbl in 2026 (up from December's $61.27 forecast)

• WTI: Average $58.72/bbl (up from December's $58.15 estimate)

Context: Brent was trading around $70 on January 30 and averaged $68.20 in 2025. WTI averaged $64.73 in 2025. The poll suggests current prices are roughly $8-10/bbl above expected annual averages, implying significant downside ahead.

Geopolitics vs. Fundamentals: "Geopolitics brings lots of noise but neither the events in Venezuela nor Iran should ultimately alter the big picture. The oil market appears to be in a lasting surplus," said Norbert Ruecker, head of economics at Julius Baer.

Analysts expect surplus to range from 0.75 to 3.5 million bpd (the IEA's latest Q1 2026 estimate is 4.25M bpd, even higher).

Analysts said U.S. trade policy shifts, China's demand trajectory, and OPEC+'s next steps will steer prices this year alongside geopolitics.

________________________________________

VENEZUELA: SUPPLY ADDITIONS WILL TAKE YEARS

Analysts broadly expect it to take years for any major production increase from Venezuela after Maduro's capture earlier this month.

Kpler Timeline:

• Venezuelan supply will dip through April due to U.S. crackdown on sanctioned tankers

• Rebound in H2 2026 as existing infrastructure is reactivated

• Any increases beyond this require sustained investment, prolonged political stability, replacement of aging infrastructure, and international firm backing

This tempers the bearish Venezuelan supply addition story. While the 50M barrels in storage are hitting the market now (Valero, Phillips 66 deals), meaningful production increases (Enverus's 1.5-3M bpd by 2035 scenarios) remain distant.

________________________________________

OPEC+ MEETING SUNDAY: MARCH PAUSE EXTENSION EXPECTED

Consensus Forecast: OPEC+ is likely to keep its pause on oil output increases for March when it meets Sunday, five delegates told Reuters, even as crude climbs above $70/bbl on Iran strike concerns.

Meeting Scope: Three of five OPEC+ delegates said Sunday's meeting is unlikely to take any decisions beyond March, keeping April and beyond uncertain.

The Eight Members: Saudi Arabia, Russia, UAE, Kazakhstan, Kuwait, Iraq, Algeria, and Oman pump about half the world's oil. They raised production quotas by about 2.9 million bpd from April through December 2025 (roughly 3% of global demand), then froze further increases for January-March 2026 due to seasonally weaker consumption.

Price Context: The meeting comes as Brent has risen to almost $72/bbl (yesterday's intraday peak of $70.35 was close), its highest since August, despite speculation that a supply glut would push prices down.

OPEC+ extending the March pause was expected and won't surprise markets. The key uncertainty is April onwards. Hamburg Commercial Bank's Cyrus De La Rubia said: "OPEC+ will defend a price floor while also watching its market share. If consumption grows enough, the coalition could carefully increase output to meet rising demand without flooding the market."

However, with Saudi Arabia going to its first discount since December 2020, the IEA's 4.25M bpd Q1 surplus, and cash Dubai in contango, the "price floor" OPEC+ can defend may be much lower than current levels.

________________________________________

BOTTOM LINE

Oil is ending a volatile month with Friday's pullback from $70+ as Trump's Iran dialogue comments deflate yesterday's regime change strike premium. The pattern we've tracked all month repeats: escalate → premium → de-escalate → fade. Despite the 1% Friday decline, Brent is headed for its biggest monthly gain since January 2022 and WTI for its largest since July 2023, driven by Winter Storm Fern (2M bpd peak outage), Kazakhstan fires (900K bpd), weak dollar (four-year lows), and Iran war premium ($3-4/bbl). However, the temporary supply disruptions are resolving: U.S. production fully restored today, Tengiz targeting full production within days, dollar strengthening on Fed nominee news. The Reuters poll consensus of $62 Brent and $58.72 WTI for 2026 suggests current prices around $70 Brent and $64+ WTI are $8-10/bbl overvalued. Julius Baer's Ruecker captured it perfectly: "Geopolitics brings lots of noise but neither Venezuela nor Iran should ultimately alter the big picture. The oil market appears to be in a lasting surplus" of 0.75-3.5M bpd (IEA says 4.25M Q1). Sunday's OPEC+ meeting will extend the March pause but likely make no decisions beyond, leaving April uncertain. Saudi Arabia's first discount since December 2020, cash Dubai in contango, and the IEA's massive Q1 surplus all scream fundamental weakness. Goldman's $54 Q4 target, the Reuters poll $62 annual average, and persistent oversupply forecasts represent the fundamental anchor. This month's rally from $60 to $70+ was driven by temporary factors (weather, geopolitics, weak dollar) that are now reversing. February starts Sunday with OPEC+ meeting, supply normalization complete, and markets refocusing on the 4.25M bpd Q1 surplus reality. The trend remains lower once geopolitical and weather premiums fade. This looks like the top of the monthly rally.