Oil prices fell modestly on Monday as concerns over supply surplus offset worries about Russia and the Middle East.

The State Organization for Marketing of Oil (SOMO) announced that Iraq, OPEC's second-largest oil producer, has increased petroleum exports in accordance with the OPEC+ agreement. The country expects September exports to reach 3.4 to 3.45 million barrels per day.

West Texas Intermediate (WTI) crude for October delivery on the New York Mercantile Exchange closed down 4 cents, or 0.06%, at $62.64 per barrel. The contract expires on Monday.

Brent crude futures settled 11 cents lower, or 0.16%, at $66.57 per barrel.

Middle Eastern tensions escalated as multiple Western nations recognized Palestinian statehood, while Eastern European tensions heightened after Estonia reported that Russian fighter jets entered its airspace without permission on Friday. However, neither development immediately disrupted oil supplies.

Concerns over adequate supply and declining demand weighed on market sentiment, with both Brent and West Texas Intermediate settling more than 1% lower on Friday, posting modest weekly declines.

SEB analysts noted: "The oil market faces a scenario where global petroleum demand will gradually weaken from the third quarter to the fourth quarter, and into the first quarter of 2026. Meanwhile, OPEC+ production is on an upward trajectory."

Sources indicated that Iraq has preliminarily approved plans to resume pipeline oil exports from its semi-autonomous Kurdish region through Turkey.