Oil prices edged up on Monday as investors weighed the market implications of upcoming US-Iran talks aimed at de-escalating tensions against a backdrop of expected OPEC+ supply increases.
Brent crude futures settled 90 cents, or 1.33 per cent, higher at $68.65 a barrel. US West Texas Intermediate crude was at $63.75 a barrel, up 86 cents, or 1.37 per cent at 14:14 EST (GMT 19:14).
The contract did not have settlement on Monday because of the US Presidents Day holiday.
Fears of supply disruption from the US-Iran tensions have helped keep oil prices stable, said Tamas Varga, an analyst with PVM. Looming Lunar New Year holidays in China, South Korea and Taiwan also dampened trade.
Both benchmarks posted weekly declines last week, with Brent settling about 0.5 per cent lower and WTI losing one per cent, after comments from US President Donald Trump that Washington could make a deal with Tehran over the next month. The two countries are due to hold a second round of talks in Geneva on Tuesday over Tehran's nuclear programme.
In the run-up to the talks with Washington, mediated by Oman, Iran's foreign minister met with the head of the International Atomic Energy Agency, the UN nuclear watchdog, on Monday. An Iranian diplomat was reported as saying that Iran is pursuing a nuclear agreement with the US that delivers economic benefits for both sides, with energy and mining investments and aircraft purchases up for discussion.
However, the US is preparing for the possibility of a sustained military campaign if the talks do not succeed, US officials have told Reuters. Iran's Revolutionary Guards have warned that if there are strikes on Iranian territory, they could retaliate against any US military base.
"Increased Iranian tension could drive Brent to $80 a barrel. Fading tension would drop it back to $60 a barrel," SEB analysts said in a note.
While US-Iran tensions push up oil prices, the Organisation of the Petroleum Exporting Countries and its allies - together called OPEC+ - are dampening them by leaning toward a decision at their March 1 meeting to resume output increases from April after a three-month halt.
Oil prices also were supported by China's continued strong crude imports and by some disruptions in oil exports, said Giovanni Staunovo, an oil analyst at UBS.
China's imports of Russian oil are set to climb for a third straight month in February, hitting a new record, after India slashed purchases following US pressure, according to traders and ship-tracking data.
(Additional reporting by Shadia Nasralla and Enes Tunagur in London, Mohi Narayan in New Delhi and Florence Tan in Singapore; Editing by Andrei Khalip, Kevin Liffey and Paul Simao)
