Oil under pressure as OPEC+ weighs further output hike ahead of US-Iran talks

By Tina Teng

Published on 23/05/2025 - 8:14 GMT+2

Crude lipid prices fell for a 3rd consecutive trading time connected Thursday up of nan US-Iran atomic talks. Traders are increasing concerned astir nan imaginable return of lipid proviso from Iran, which holds astir one-third of nan world’s lipid reserves.

Adding to nan pressure, a Bloomberg study stated that nan Organisation of nan Petroleum Exporting Countries and its friends (OPEC+) is considering a 3rd consecutive accumulation hike successful July, compounding fears of an oversupplied market.

Oil prices continued to diminution during Friday’s Asian session. As of 4:40 americium CEST, Brent futures were down 0.59% to $64.06 per barrel, while West Texas Intermediate (WTI) futures fell 0.6% to $60.83 per barrel—both rubbing their lowest levels successful complete a week.

Potential oversupply overshadows geopolitical tensions

Crude prices person knowledgeable notable volatility successful caller weeks arsenic marketplace participants measurement rising geopolitical tensions against mounting proviso from awesome oil-producing nations. Broader macroeconomic factors—such arsenic easing US-China waste and acquisition tensions and renewed trading successful US Treasuries—have besides been influencing lipid marketplace movements.

Earlier successful nan week, prices concisely spiked pursuing a CNN study that Israel was preparing to motorboat strikes against Iran’s atomic facilities, citing intelligence from US sources. However, nan rally proved short-lived, pinch analysts suggesting nan informing whitethorn person been a strategical move by nan US to exert unit connected Iran up of nan atomic negotiations.

The geopolitical boost was quickly overshadowed connected Wednesday by information showing a surge successful US crude inventories. According to nan Energy Information Administration (EIA), US lipid stockpiles roseate to 443.2 cardinal barrels successful nan week ending 16 May—the highest level since July 2024. The study besides indicated that nett US crude imports had accrued for a 3rd consecutive week, while home request remained weaker than expected.

OPEC+ whitethorn accelerate accumulation hike

News astir OPEC+’s imaginable acceleration successful accumulation hike sent nan lipid value down further connected Thursday. The lipid accumulation cartel is reportedly considering hiking crude output by 411,000 barrels per time (bpd) successful July. The determination is yet to beryllium finalised connected 1 June erstwhile nan group holds nan adjacent meeting.

The group, which accounts for astir 40% of world lipid supply, has jointly reduced accumulation by astir 2.2 cardinal bpd successful 2023. The quicker-than-expected phased rollback began pinch a 135,000 bpd summation successful April, tripling to 411,000 bpd successful May and June. The acceleration is seen arsenic a punitive measurement against members which grounded to comply pinch agreed accumulation quotas, pinch Kazakhstan and Iraq identified arsenic caller overproducers.

Crude prices person consistently fallen pursuing OPEC+ announcements of larger-than-expected accumulation increases successful some April and May. However, nan imaginable July determination whitethorn already beryllium priced successful by markets—unless nan group surprises traders pinch an moreover much fierce proviso boost.

Demand outlook remains weak

The request outlook remains vulnerable amid ongoing concerns complete slowing world growth, peculiarly driven by nan US tariffs. Crude prices had antecedently dropped to a four-year debased connected 9 April and again connected 5 May. The lipid marketplace rebounded pursuing nan US and China’s waste and acquisition talks earlier this month, erstwhile nan world’s 2 largest economies reached an statement to region precocious tariffs connected each different for 90 days.

While near-term unit remains supply-driven, location is cautious optimism that a sustained betterment successful marketplace sentiment, driven by further advancement successful US tariff negotiations, could support a rebound successful lipid demand.

“While nan contiguous unit comes from nan proviso side, I judge that successful nan longer term, further advancement connected US tariff negotiations pinch cardinal partners could revive request and connection much meaningful support for oil,” Dilin Wu, a investigation strategist astatine Pepperstone Australia, said.