Oil prices fell on Friday and looked set for a second week of declines as concerns about a possible US-Iran conflict receded and signs of oversupply in global markets increased.
Brent crude futures were down 0.1 per cent at about $67.46 a barrel in early trading, after sliding 2.7 per cent in the previous session. WTI crude oil also eased, dipping 0.2 per cent to around $62.72 a barrel. These movements left Brent on track for a weekly loss of roughly 0.8 per cent and WTI down about 1.1 per cent.
Earlier in the week, oil prices had been supported by concerns that tensions between the United States and Iran could escalate into a conflict that might disrupt supply. However, comments from Donald Trump signalling that Washington might seek more time to negotiate a nuclear deal eased fears of immediate confrontation and reduced the geopolitical risk premium in prices.
Analysts said this shift in sentiment contributed to the pullback in crude. “Oil prices are lower amid signs the US is seeking more time to reach a nuclear deal with Iran, reducing the near-term geopolitical risk premium,” Tony Sycamore, a market analyst at IG, wrote in a note.
Prices were further under pressure after the International Energy Agency projected weaker global oil demand growth in its latest monthly report, with supply poised to exceed consumption this year. Traders have also been watching large builds in US crude inventories and expectations of increased Venezuelan output as sanctions ease, which would add to available supply.
“There is an expectation that Venezuelan oil supply will return to pre-blockade levels in the months ahead,” Sycamore said, noting production could rise from about 880,000 barrels per day to 1.2 million bpd. A US government official said more allowances easing sanctions on Venezuelan energy would be issued this week.
Despite recent declines, some market participants have noted that prices did not plunge more sharply in response to bearish news, suggesting downside momentum might be slowing.
Oil’s direction in the near term will likely remain sensitive to developments in US-Iran diplomacy and future supply-demand forecasts from key energy institutions, analysts said.