West Texas Intermediate (WTI) oil prices continued their upward trajectory on Friday, trading at approximately $62.80 during the Asian session. However, despite this daily gain, WTI prices are still poised for a weekly decline, primarily driven by growing concerns over an oversupply in the market. These concerns are largely rooted in the possibility of increased production from OPEC+ (the Organization of the Petroleum Exporting Countries and its allies).
Several OPEC+ members are reportedly pushing for another month of production hikes in June. Kazakhstan, a key player in the alliance, has stated it cannot reduce output at its significant oil fields, emphasizing its national interests in setting production levels.
In a related development, Iranian Foreign Minister Abbas Araqchi expressed readiness on Thursday to travel to Europe for further negotiations on Tehran’s nuclear program. Progress in these talks with the United States and European nations could potentially lead to the lifting of sanctions on Iranian oil exports, adding another variable to global supply dynamics.
Moreover, the prospect of a ceasefire in Ukraine and the easing of sanctions on Russia could further contribute to downward pressure on oil prices. Russian Foreign Minister Sergey Lavrov indicated that talks with the United States are making headway toward resolving the conflict in Ukraine, although several major issues remain unresolved. Despite these diplomatic efforts, US President Donald Trump condemned Russia’s recent missile and drone attacks on Kyiv, urging Russian President Vladimir Putin to cease hostilities.
Additionally, the global oil market faces a bleak demand outlook, exacerbated by ongoing US-China trade tensions. The trade war between the world’s two largest oil consumers continues to elevate business costs, downgrade financial forecasts, and disrupt global supply chains, all of which heighten concerns over a potential economic slowdown. Such a slowdown could further weaken oil demand in the near future.
