Oil prices were largely steady on Friday and were set for a second consecutive weekly gain as trade tensions between the United States and China eased. However, the potential return of Iranian supply limited price gains.
As of 6:10 GMT, Brent crude futures gained 0.02 percent to $64.54 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures slid 0.02 percent to $61.61. Both contracts fell more than 2 percent in the previous session following a selloff due to the rising prospect of U.S.-Iran deal.
Despite the oversupply risks, both Brent and WTI were up 1 percent so far this week, after a surge earlier in the week.
Outlook remains uncertain despite tariff pause
Market sentiment rose this week after the U.S. and China, the world’s two biggest oil consumers and economies, agreed to a 90-day tariff pause during which both sides would sharply lower trade duties. The emerging trade war between the two countries had raised fears regarding global economic growth, oil demand and prices.
Analysts at BMI maintained their forecasts for oil prices. They expected Brent to average $68 per barrel in 2025 and $71 per barrel in 2026, down from 2024’s $80 per barrel, citing the uncertainty of trade policy on the price outlook.
“While the 90-day cooling off period leaves the door open for additional progress on lowering trade barriers on both sides, the uncertainty on longer-term trade policy will limit price upside,” the analysts said in a report.
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IEA forecasts raise oversupply concerns
Further adding to the market oversupply concerns, the International Energy Agency on Thursday raised its 2025 global supply growth forecast by 380,000 bpd, as Saudi Arabia and other OPEC+ members unwind output cuts. The IEA also projected a surplus for next year, despite a minor upward revision of its 2025 global oil demand forecast by 20,000 bpd.
Earlier this week, data from the U.S. Energy Information Administration showed crude stockpiles rose by 3.5 million barrels to 441.8 million barrels in the week ended May 9, compared with analysts’ expectations for a 1.1 million-barrel draw. This surprise rise in U.S. inventories overnight also weighed on oil prices.
Investors were also watching for signs of interest rate cuts by the Federal Reserve, which could bolster the economy and oil demand.
On the U.S.-Iran deal, President Donald Trump said the U.S. was nearing a nuclear deal with Iran, with Tehran “sort of” agreeing to its terms. ING analysts said in a note that a deal that includes lifting sanctions would ease supply risk, allowing Iran to increase oil output and find more willing buyers for its oil. This could result in an additional supply of around 400,000 barrels per day (bpd).
