Oil prices eased by 0.3% as a strong U.S. dollar and concerns over sanctions weighed on the market, ahead of key US economic data.
The pullback follows a five-session rally driven by colder weather and Chinese stimulus measures. However, the dollar’s strength – near a two-year high – curbed buying interest in dollar-priced commodities.
Investors are awaiting insights into the Fed’s rate outlook and economic health, with the minutes from its latest meeting due Wednesday and December payrolls data set for release on Friday.
Geopolitical factors also weighed on sentiment. The Biden administration is preparing more sanctions on Russia targeting oil revenues, while Goldman Sachs forecasts Iranian output could fall by 300,000 bpd by Q2 under Trump's anticipated policies.
Meanwhile, Saudi Arabia raised prices for Asian buyers, signaling expectations of tighter supply after OPEC+ postponed output hikes. Aramco boosted Arab Light crude prices by 60 cents to $1.50 above benchmark levels.
Despite the price hike, global markets remain pressured by potential supply surpluses, driven by rising non-OPEC production and potential increases in U.S. output under the Trump administration.