London, January 16, 2026, 11:57 GMT — Regular session
Oil prices nudged up on Friday, recovering after a steep drop the previous day as traders balanced persistent supply concerns with dwindling hopes of imminent U.S. military strikes on Iran. By 1000 GMT, Brent crude climbed 50 cents, or 0.78%, reaching $64.26 a barrel and looked set for its fourth weekly gain. U.S. West Texas Intermediate (WTI) rose 48 cents, or 0.81%, to $59.67. Analysts at BMI flagged that Iran’s political unrest could trigger “greater volatility,” while IG noted any flare-up would shift focus back to the Strait of Hormuz, a crucial route for around 20 million barrels daily. 1
The bounce is significant because Thursday’s drop was sharp: both benchmarks fell roughly 4% after President Donald Trump indicated the crackdown on protesters in Iran was easing. That undercut the so-called risk premium — the extra cost tied to potential supply disruptions. Brent closed at $63.76 and WTI at $59.19, after Brent reached $66.82 on Wednesday, its highest level since September. Phil Flynn from Price Futures Group said the market shifted from expecting a “high likelihood” of a U.S. strike to a “low likelihood,” which he identified as the key factor behind the day’s selloff. 2
Fundamentals offered little support for the bulls. U.S. commercial crude stocks rose by around 3.4 million barrels to 422.4 million barrels in the week ending Jan. 9, contrary to expectations of a drawdown, while gasoline inventories increased by about 9 million barrels, according to EIA data. That same report showed U.S. crude production steady near 13.75 million barrels per day for the week. 3
Talk of Venezuelan supply is back. According to six industry sources, Repsol, ENI, and Maurel & Prom have applied for U.S. licences or authorisations to resume exporting Venezuelan crude under debt-recovery schemes, Reuters reports. Washington had suspended most of these licences last year. Reuters also revealed that Caracas and Washington agreed this month on a 50-million-barrel crude supply deal. Chevron is expected to get an expanded licence, potentially allowing it to boost production and exports. 4
OPEC is pushing back against talk of a supply glut. Its first forecast for 2027 shows demand growth at 1.34 million barrels per day, nearly matching the 1.38 million bpd projected for 2026. The group also released data pointing to a near balance between supply and demand this year. This, however, conflicts with the International Energy Agency’s latest estimate, which suggests a 3.84 million bpd surplus for 2026. The IEA will update its numbers on Jan. 21. 5
Macro factors are weighing on the market. The dollar hovered near a six-week peak as investors dialed back expectations for Fed rate cuts. A stronger greenback usually pushes up prices for dollar-denominated commodities for those using other currencies. Michael Brown, senior research strategist at Pepperstone, admitted he wouldn’t feel “entirely confident” taking a long or short position in crude ahead of a three-day weekend, with tensions in the Middle East still simmering. 6
The market is weighing which moves will hold as Iran-related headlines fade. Friday’s rally falls short of wiping out Thursday’s drop, with the week marked more by rapid swings than a clear direction.
But the risk cuts both ways. Should geopolitics ease and inventories continue to pile up, crude could slip back toward the lower end of its recent range. On the flip side, if tensions reignite or shipping routes face threats, any bounce could quickly widen into a sharp jump amid thin trading.
Traders are keeping an eye on physical indicators — refinery runs, export volumes, and if increased supply expectations actually materialize on the tape — beyond just the headlines.
Coming up, the Energy Information Administration will drop its Weekly Petroleum Status Report on Thursday, Jan. 22, at 12:00 p.m. and again at 2:00 p.m. Eastern. This double release is because the federal government closes Monday, Jan. 19. 7
