Iran Protests Enter Third Week as Oil Rallies: Brent Climbs Above $63 on Supply Fears

After months of shrugging off geopolitical headlines, oil markets are finally paying attention. Brent crude futures climbed above $63 per barrel on Monday following the largest two-day rally since October, as escalating protests in Iran forced traders to confront the possibility of meaningful supply disruptions from one of OPEC's largest producers.

The Stakes in Tehran

The unrest has entered its third week and shows no signs of abating. Reports indicate hundreds of deaths as authorities signal a tougher crackdown on demonstrators. U.S. President Donald Trump has warned Tehran against targeting protesters and is reportedly weighing military options against Iran—a significant escalation in rhetoric that has captured oil traders' attention.

Iran exports nearly 2 million barrels per day and ranks as OPEC's fourth-largest producer. Any disruption to these flows would materially tighten global oil supplies at a time when the market balance remains precarious.

"The escalating protests in Iran have raised concerns over potential supply disruptions. Iran's position as a major producer makes any escalation a material risk to global supply."

— Energy market analyst note

Price Action and Market Positioning

WTI crude oil hovered around $59.36 per barrel on Monday, rising for the third consecutive session. Brent advanced to $63.39, up from last week's lows and marking a significant reversal from the bearish sentiment that dominated energy markets through much of 2025.

Both benchmarks fell by nearly 20% last year, marking their worst annual performance since the pandemic-driven collapse in 2020. The recent rally represents the first sustained upward momentum in months and has caught many traders positioned for continued weakness off guard.

Over the past month, Brent's price has risen 4.67%, though it remains 21.75% lower than a year ago. This context matters: even with the Iran premium building into prices, crude remains well below levels that would significantly impact consumer budgets or corporate margins.

The Venezuela Wildcard

Adding to the geopolitical complexity, uncertainty over Venezuela's crude shipments persists as shifts in U.S. policy and sanctions continue to cloud the outlook for its oil flows. President Trump has warned Cuba that Venezuelan oil and financial support would be cut off unless Cuban leaders reach a deal with Washington.

Venezuela's production capacity, while diminished from historical levels, still represents a meaningful swing factor in global markets. The combination of Iranian and Venezuelan risk premiums has given bulls their first convincing narrative in months.

The Bearish Counterargument

Despite the geopolitical tailwinds, the fundamental picture for oil remains challenged. The Energy Information Administration forecasts that Brent prices will drop to an average of $55 per barrel in the first quarter of 2026 and stay near that level for the rest of the year.

Goldman Sachs commodities strategists are forecasting full-year prices for Brent and WTI at $56 and $52, respectively. JPMorgan sees Brent at $58 and WTI at $54. These forecasts reflect a market reality where production levels continue to exceed consumption.

In 2026, production and consumption are expected to grow at similar rates, but production levels will continue to exceed consumption. Global oil inventory builds are forecast to exceed 2 million barrels per day—a substantial surplus that would ordinarily pressure prices lower.

OPEC's Dilemma

The cartel faces an unenviable position. With spare capacity elevated and non-OPEC production (particularly from the United States) continuing to grow, any attempt to defend prices through production cuts risks ceding market share to competitors. Yet allowing prices to fall further threatens the fiscal positions of oil-dependent economies.

This structural tension means that geopolitical events like the Iran protests may offer only temporary price support. Once the headlines fade—assuming no actual supply disruption materializes—the market may return to its bearish equilibrium.

What It Means for Your Wallet

For American consumers, the current oil rally is unlikely to meaningfully impact gasoline prices. With WTI still below $60 and forecasters expecting continued weakness, pump prices should remain manageable throughout 2026.

For investors, energy stocks have been among the market's laggards, and the sector trades at substantial discounts to historical valuations. The Iran situation provides a reminder that geopolitical risk hasn't disappeared from energy markets—it's simply been ignored. Whether that risk materializes into actual supply disruptions will determine whether the current rally has legs or fades like so many before it.

Oil markets remain balanced between risks that support prices and structural headwinds from sluggish demand growth and elevated supply. The Iran protests have tilted that balance, at least temporarily, in favor of the bulls.