Oil prices stabilized as markets braced for fresh geopolitical signals from President Donald Trump’s highly anticipated appearance at the World Economic Forum in Davos. Brent crude hovered near the mid-$60s per barrel, reflecting a cautious balance between political uncertainty and persistent concerns about excess supply.

The latest strain in transatlantic relations — sparked by Washington’s push to assert control over Greenland and threats of new tariffs against European allies — has injected volatility into global markets. European leaders have signaled readiness to retaliate, raising the risk of a broader trade confrontation that could weigh on economic growth and, by extension, energy demand.

IEA Outlook Keeps Pressure on Prices

Despite geopolitical noise, the International Energy Agency’s updated outlook reinforced a familiar theme for oil markets: supply continues to outpace demand. While the agency marginally increased its forecast for global oil consumption growth in 2026, it also confirmed that markets are still heading toward a meaningful surplus.

Stockpiles are expected to rise significantly this year, cushioning prices against disruptions in major producing regions. The IEA cautioned that while the projected surplus may not fully materialize, the underlying imbalance remains a central feature of the current oil landscape.

Geopolitics Versus Fundamentals

Political risk is providing intermittent support to prices. Ongoing uncertainty surrounding Iran, Venezuela, Russia, and Kazakhstan has kept traders alert to potential supply interruptions. Recent operational issues in parts of the Black Sea region and temporary shutdowns at key production sites have also tightened near-term availability.

However, these risks have so far failed to overpower broader fundamentals. Strong production growth, particularly from non-OPEC sources, continues to dilute the impact of localized disruptions, reinforcing a ceiling on price gains.

Trump Factor Dominates Short-Term Sentiment

With Trump set to address global leaders in Davos, markets remain sensitive to any rhetoric that could escalate trade disputes or reshape energy policy. His administration’s denunciation of proposed NATO military exercises in Greenland has further complicated relations with Europe, adding another layer of uncertainty for investors.

Analysts note that oil prices are increasingly reacting to political developments rather than traditional supply-and-demand signals, at least in the short term. Still, without a material shift in fundamentals, sustained rallies remain difficult to justify.

What to Watch Next

Looking ahead, oil markets are likely to stay rangebound. Traders will focus on signals from Trump’s Davos remarks, upcoming demand data, and any concrete changes in production or export flows. Until surplus conditions meaningfully tighten, geopolitical headlines may spark volatility — but not necessarily a lasting price breakout.