WTI crude oil futures for March delivery fell by $1.79, or 2.77%, to settle at $62.84 per barrel. Brent crude futures for April delivery dropped by $1.88, or 2.71%, settling at $67.52 per barrel.
On February 12, the Kremlin drafted a proposal considering a "return to the US dollar" as part of building a broad economic partnership with the Trump administration. The high-level memorandum, drafted this year, details seven potential areas of mutual economic interest between Russia and the United States, contingent on an agreement to end the conflict in Ukraine. The Russian proposal envisions the two countries jointly promoting fossil fuels against green alternatives, co-investing in areas such as natural gas, deep-sea oil, and critical raw materials, and generating substantial profits for US companies. The document, circulated among senior Russian officials, reveals for the first time the Kremlin's deeper strategy and considerations as a potential US-Russia economic agreement is being negotiated as a key component of a future Ukrainian peace deal. The core of the proposal is Russia's return to the US dollar settlement system—a move that would signify a dramatic policy reversal and could trigger a significant reshaping of the global financial landscape.
On February 12, the International Energy Agency (IEA) lowered its forecast for global oil demand growth in 2026 in its February Oil Market Report, while its projection for a significant supply surplus remained largely unchanged. The agency now expects demand to increase by 850,000 barrels per day this year, down from the 930,000 barrels per day forecast in its January report, citing that price increases in the first few weeks of the year have already "weighed on growth prospects." The IEA's new demand growth forecast puts total demand for 2026 at 104.87 million barrels per day. The agency stated that demand will peak in the fourth quarter, exceeding 106 million barrels per day. The variability of these forecasts is evident—the IEA's initial projection for 2026 demand growth made in April 2025 was only 690,000 barrels per day. Its estimates continue to show a significant divergence from those of OPEC's research department, which this week forecasted 2026 oil demand growth of 1.38 million barrels per day, reaching 106.52 million barrels per day.
Trump expressed a desire to reach an agreement with Iran within the next "month or so," warning of "very severe" consequences if a deal is not achieved, while US aircraft carrier deployments are poised. Israeli Prime Minister Netanyahu publicly questioned the enforceability of any such agreement.
**Investment Logic** Recent statements indicate a desire to reach an agreement with Iran within a month. Current signs suggest that the military pressure is more a coercive tactic to force Iranian concessions in negotiations rather than an intent to initiate direct conflict. Given the strategic importance of the Strait of Hormuz, the US faces a choice between targeting Iran and maintaining stable oil prices. With midterm election pressures, the cost of military action against Iran is extremely high for the US administration. Although the threat of military strikes persists, the probability of such action has decreased significantly compared to the start of the year. If the US and Iran subsequently reach an agreement rather than engage in conflict, the threat to the Strait of Hormuz would be effectively removed, allowing crude oil prices to return to being primarily driven by fundamental supply and demand factors.
**Strategy** Oil prices are expected to trade within a range in the short term. The high uncertainty surrounding the Iran situation warrants careful risk management. A medium-term short position is advised.
**Risks** Downside Risks: Sanctioned oil supplies becoming compliant, macroeconomic "black swan" events. Upside Risks: Tightening supply from sanctioned oil producers (Russia, Iran, Venezuela), large-scale supply disruptions due to Middle East conflicts.