Oil prices fell by approximately 2% to a one-week low on Thursday, after U.S. President Trump de-escalated threats concerning Greenland and Iran, while some positive developments potentially advanced solutions to the Russia-Ukraine war. The Brent crude contract dropped by $1.18, or 1.81%, settling at $64.06 per barrel. The March-delivery West Texas Intermediate (WTI) crude contract on the New York Mercantile Exchange declined by $1.26, or 2.08%, closing at $59.36 per barrel. Trump claimed to have secured permanent usage rights to Greenland through a NATO agreement, while the NATO Secretary-General emphasized the need to strengthen Arctic security commitments to counter Russian threats. EU diplomats revealed that, due to Trump's threats of tariffs and even military action severely shaking confidence in transatlantic relations, EU leaders would reassess relations with the U.S. at an emergency summit. The head of commodity analysis at Saxo Bank stated, "The risk premium related to the Greenland controversy is fading, and Iran supply risks have also diminished." Although Trump expressed a desire to avoid further military action against Iran, he warned of action if Iran restarts its nuclear program. Iran, currently under sanctions, is OPEC's third-largest oil producer. IG analysts noted that with tensions easing over Greenland and Iran, oil prices should stabilize around $60. Following talks with Trump at Davos, the Ukrainian President indicated that security guarantee terms were finalized, but territorial issues remain unresolved. After weeks of shuttle diplomacy between U.S. and Ukrainian officials, Trump continues to pressure Ukraine towards peace, despite Russia showing minimal willingness for a ceasefire. A potential peace agreement and the lifting of sanctions on Russia, the world's third-largest oil producer, could lower oil prices by increasing global fuel supplies. The French navy recently intercepted a ghost fleet tanker in the Mediterranean suspected of transporting sanctioned Russian crude. Data shows Russia's oil production declined by 0.8% last year to 10.28 million barrels per day, accounting for about one-tenth of global output. In sanctioned OPEC member Venezuela, traders like Vitol and Trafigura are exporting fuel oil under a U.S.-supported agreement. A draft obtained by Reuters indicates Venezuela plans a comprehensive oil and gas reform, allowing domestic and foreign companies to independently operate oil fields and sell products under new contract models, even as minority shareholders of the state oil company, enabling them to receive sales revenue. Additionally, deteriorating profit expectations for European companies are weighing on oil prices. According to LSEG data, European corporate profits for the fourth quarter of 2025 are forecast to decline by 4.2%, slightly worse than the 4.1% predicted a week earlier. However, Saudi Aramco's CEO emphasized that predictions of a global oil glut are severely exaggerated, citing strong demand growth and ongoing inventory drawdowns. A report from the U.S. Energy Information Administration showed crude inventories increased by 3.6 million barrels for the week ending January 16, significantly exceeding analysts' expectations of a 1.1 million barrel rise and also higher than the 3 million barrel increase reported by the American Petroleum Institute the previous day. Due to the Martin Luther King Jr. Day holiday, this week's inventory report was released one day later than usual.
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