Oil prices edged higher on Friday but were on track for a weekly loss amid higher supply prospects. A potential OPEC+ output increase and a possible ceasefire in the Russia-Ukraine war have raised concerns of stronger output amid fears of faltering demand due to U.S. tariffs.
As of 4:33 GMT, Brent crude futures were up 0.65 percent to $66.98, and U.S. West Texas Intermediate crude rose 0.68 percent to $63.22. Brent is on track for a 2 percent weekly fall while WTI crude is set to decline 2.9 percent for the week.
U.S.-China trade talks underway
U.S. President Donald Trump said on Thursday that trade talks between the U.S. and China are underway, pushing back against Chinese claims that no discussions have taken place to ease the ongoing trade war. Meanwhile, a spokesperson for China’s commerce ministry stated that if the U.S. wants to resolve the trade dispute, it should lift all unilateral tariff measures against China.
Easing trade tensions have supported the recent uptick in oil prices. However, the demand outlook remains uncertain amid the trade war between the world’s two largest oil consumers. The International Monetary Fund said on Wednesday that tariffs will slow growth and push debt higher across the globe, and slow economic growth traditionally limits oil demand.
Russia-Ukraine deal progresses
The United States and Russia are moving in the right direction to end the war in Ukraine, but some specific elements of the deal are yet to be agreed on, said Russian Foreign Minister Sergey Lavrov in a recent interview.
The end of Russia’s war in Ukraine and the easing of sanctions against it could allow more Russian oil to enter the global markets, limiting the upside in oil prices. Russia, a member of the OPEC+ group, is one of the world’s biggest oil producers along with the U.S. and Saudi Arabia.
A Russian missile attack on Ukraine’s capital, Kyiv, yesterday killed at least twelve people and injured dozens. This was one of the deadliest strikes since Russia launched its full-scale invasion more than three years ago, prompting President Donald Trump to criticize the move, saying “Vladimir, STOP!”
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OPEC+ to accelerate oil output
Further adding to global supply concerns, several OPEC+ members suggested the group accelerate oil output increases for a second month in June, Reuters reported earlier this week. Eight OPEC+ countries will meet on May 5 to decide the June output plan.
Oil prices hit a four-year low in April, dragged down by the U.S.-China trade war and an unexpected decision by OPEC+ to increase output by 411,000 barrels per day of oil in May, which was three times more than the group originally planned.
Moreover, Iranian Foreign Minister Abbas Araqchi said on Thursday he was ready to travel to Europe for talks on Tehran’s nuclear program. Successful talks with Europe and the U.S. would likely result in the lifting of sanctions on Iranian oil exports. Iran is the third-biggest oil producer in OPEC behind Saudi Arabia and Iraq.
