MUSCAT : In early trading, Brent crude futures fell about 91 cents to $69.80 a barrel, easing from Thursday’s rally that lifted prices to their highest since late July. The more actively traded April Brent contract slid to around $68.52. U.S. West Texas Intermediate (WTI) crude also dipped, dropping over $1 to about $64.36 a barrel after climbing sharply in the previous session.

Despite the pullback, both benchmarks are on track for strong monthly gains, Brent up nearly 15 per cent and WTI around 12 per cent in January, marking their most substantial monthly performance in years.

Investors have priced in a heightened geopolitical risk premium over the past week amid concerns that a potential U.S. military strike on Iran could disrupt crude flows from one of OPEC’s top producers, particularly through the Strait of Hormuz. While fears of an imminent attack have eased somewhat, risk remains elevated, keeping oil prices supported.

Markets also reacted to a rise in the U.S. dollar, which pared some of crude’s weekly losses after comments that the U.S. may nominate a new Federal Reserve chair and amidst optimism that lawmakers would avert a government shutdown.

Compounding Middle East risks, analysts point to supply disruptions in key producers as upward pressure on prices. According to financial analysts, disruptions across Kazakhstan, Russia and Venezuela impacted roughly 1.5 million barrels per day of output in January, further tightening market balances. A senior Kazakh oilfield, affected by recent fires, is being brought back online in phases after earlier outages, though full restoration could take days.

Additionally, forecasts of cold weather in the United States are expected to curb crude and condensate production this month, potentially subtracting further output.