Oil prices showed little movement on Tuesday as investors reassessed dwindling hopes for a peace resolution in the ongoing Russia-Ukraine conflict amidst rising geopolitical tensions in the Middle East, particularly in Yemen.
Brent crude futures set for February delivery edged up by 32 cents, or 0.52%, reaching $62.26 per barrel by midday, while the more actively traded March contract increased by 33 cents, or 0.54%, to $61.82. Meanwhile, U.S. West Texas Intermediate (WTI) crude similarly gained 32 cents, or 0.55%, bringing it to $58.40.
The previous session saw Brent and WTI benchmarks close over 2% higher following significant developments: Saudi Arabia launched airstrikes against targets in Yemen, while Russia levelled accusations against Ukraine for allegedly attacking a presidential residence, which further stressed already fragile peace talks. Russia indicated it would adopt a firmer stance in negotiations, a move Kyiv dismissed as unfounded and an attempt to derail discussions.
UBS analyst Giovanni Staunovo noted that market expectations now reflect a lack of anticipation for an immediate breakthrough in peace negotiations between Russia and Ukraine. Alongside geopolitical factors, the U.S. blockade on Venezuelan oil and adverse weather disrupting Caspian CPC Blend exports have also contributed to price support.
Further complicating the situation, a Saudi-led coalition has undertaken strikes, citing foreign military support to UAE-backed separatists in southern Yemen. Recently, Saudi Arabia emphasized that its national security is non-negotiable, calling for the withdrawal of UAE forces from Yemen within 24 hours after an airstrike targeted the port city of Mukalla.
Amidst these developments, traders have been closely monitoring Middle East tensions, especially after U.S. President Donald Trump stated that further military action against Iran could be considered if Tehran resumed its ballistic missile or nuclear weapons programs.
Despite the heightened risk of supply disruptions, analysts have cautioned that perceptions of an oversupplied global market could continue to weigh down prices. Marex analyst Ed Meir predicted a downward trend in prices in the first quarter of 2026, attributing this outlook to a burgeoning oil glut.
