Oil prices were little changed on Monday, trading near their highest since May 2015, as political concerns in some OPEC nations offset projections for higher U.S. oil production.
"Oil prices are finely balanced in today's trading session. Ongoing protests in Iran, together with recent detention of several princes in Saudi Arabia, have reinvigorated geopolitical concerns," Abhishek Kumar, senior energy analyst at Interfax Energys Global Gas Analytics in London.
"However, prospects for further increases in U.S. oil production amid recent improvements seen in oil prices continue to promote bearish sentiment," Kumar said.
Last week, both contracts rose to their highest since May 2015 with Brent at $68.27 and WTI at $62.21.
Traders said the gains were due to a slight decline in the number of U.S. rigs drilling for new production, which eased by five in the week to Jan. 5 to 742, according to data from oil services firm Baker Hughes.
Despite this, U.S. production is expected to break through 10 million barrels per day (bpd) very soon, largely thanks to soaring output from shale drillers. Only top producers Russia and Saudi Arabia produce more.
"The U.S. oil price is now into a range that is anticipated to attract increased shale oil production," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
"Traders may decide that discretion is the better part of valour while markets wait on evidence of what happens to the rig count and production levels over the next couple of months."
Rising U.S. production is the main factor countering production cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and by Russia, which began in January last year and are set to last through 2018.
A senior OPEC source from a major Middle Eastern oil producer said on Monday that OPEC was monitoring unrest in Iran as well as Venezuela's economic crisis, but will boost output only if there are significant and sustained production disruptions from those countries.
Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore, said "the OPEC vs shale debate will rage" this year, being a key price driving factor.
However, Innes added that Middle East turmoil would remain a key focus for oil markets, which he warned had the potential to "send oil prices rocketing higher".