Oil traded little changed on Monday, with investors weighing the market implications of upcoming US-Iran talks aimed at de-escalating tensions against a backdrop of expected OPEC+ supply increases.
Brent crude futures edged up 3 cents to $67.78 a barrel by 0358 GMT.
US West Texas Intermediate crude was at $62.91 a barrel, up 2 cents. There will be no WTI settlement on Monday due to a US holiday, said Reuters.
Last week, both benchmarks posted weekly declines with Brent settling down about 0.5% and WTI losing 1% after comments from US President Donald Trump that Washington could make a deal with Tehran over the next month drove down prices on Thursday.
The two countries due to hold a second round of talks in Geneva on Tuesday after renewing negotiations earlier this month aimed at tackling their decades-long dispute over Tehran's nuclear program and averting a new military confrontation.
Iran is pursuing a nuclear agreement with the US that delivers economic benefits for both sides, with energy and mining investments and aircraft purchases up for discussion, an Iranian diplomat was reported as saying on Sunday.
"With both sides expected to hold firm on their core red lines, expectations are low that a deal can be reached and this is likely to be the calm before the storm," IG market analyst Tony Sycamore said.
The US has dispatched a second aircraft carrier to the region and is preparing for the possibility of a sustained military campaign if the talks do not succeed, US officials have told Reuters. Iran's Revolutionary Guards have warned that in case of strikes on Iranian territory, they could retaliate against any US military base.
With US-Iran tensions pushing up oil prices, the Organization of the Petroleum Exporting Countries and allies - together called OPEC+ - are leaning toward resuming output increases from April following a three-month halt, to meet peak summer demand, Reuters reported.
Activity in global financial markets is expected to be muted on Monday with China, South Korea and Taiwan closed for Lunar New Year holidays, in addition to Presidents Day in the United States.
"With Chinese demand cues largely absent this week, liquidity remains thin and price action could stay erratic," said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
In the near term, geopolitical developments and inventory data will remain the primary drivers of volatility, keeping crude vulnerable to sharp two-way swings, Sachdeva added.
