These declines came as the market digested reports that OPEC+ may raise output beyond the 411,000 barrels per day previously decided for May and June. Analysts warned that such a move could worsen the current global supply surplus, which JPMorgan estimates at 2.2 million barrels per day. The potential increase in output has raised concerns that prices will continue to weaken, with some forecasts suggesting crude could fall into the high $50s by the end of the year.

Trade tensions also added pressure on oil prices. A post on Truth Social by U.S. President Donald Trump, suggesting possible new tariff actions against China, reignited fears of a renewed trade conflict. This followed a federal appeals court ruling that temporarily reinstated Trump’s sweeping tariffs, reversing a previous decision to block them. Analysts noted that uncertainty around trade policy continues to be a significant headwind for oil markets.

In addition, U.S. economic data showed a slowdown in consumer spending in April, signaling potential weakness in fuel demand just as the summer driving season begins. This data, combined with expectations of increased oil supply, deepened concerns that demand growth may not keep pace with expanding production.

As a result, both Brent and WTI benchmarks were headed for weekly losses of over 1%. With OPEC+ set to meet on Saturday, market participants will be closely watching for confirmation of production decisions that could shape the direction of oil prices in the coming weeks.

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Prices initially rose after a U.S. court ruled that President Trump exceeded his authority with sweeping tariffs, but optimism faded as administration officials downplayed the ruling’s impact and emphasized alternative legal tools. Analysts noted that key sector-specific tariffs remain in place, and uncertainty around trade policy continues.

Oil sentiment was also dampened by remarks from IEA chief Fatih Birol, who highlighted weak demand from China and persistent uncertainty tied to developments in Russia and Iran. Talks between the U.S. and Iran remain unresolved, with concerns fluctuating between the risk of conflict and the potential for a nuclear deal that could add Iranian barrels to global supply.

Investors also looked ahead to Saturday’s OPEC+ meeting, where the group is expected to approve another 411,000 barrels per day production hike for July. Analysts at ING see the group maintaining this pace through Q3 as it shifts focus toward protecting market share.

Adding to supply-related developments, Chevron’s operations in Venezuela have ended following the expiration of its license, which had allowed it to export roughly 290,000 barrels per day—over one-third of Venezuela’s total output.

Despite the broader downtrend, prices found some support late in the session after U.S. government data showed a surprise 2.8-million-barrel draw in crude inventories, against expectations of a slight build. In Canada, ongoing wildfires in Alberta prompted evacuations and production cuts, raising further concerns over potential supply disruptions.

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Brent crude settled at $64.90 a barrel, up 81 cents or 1.26%, while U.S. West Texas Intermediate (WTI) climbed 95 cents, or 1.56%, to $61.84.

Investors had expected OPEC+ to approve a production increase this week, but the group opted to hold steady. Instead, they agreed to create a new framework for determining output baselines for 2027. Analysts noted most member countries lack the capacity to alter production significantly, which may limit the group’s flexibility going forward.

A separate meeting of eight OPEC+ countries is scheduled for Saturday and could lead to a July output increase. Still, some analysts, including those at Goldman Sachs, expect production to remain flat after that, unless compliance weakens or demand unexpectedly surges.

Additional upward pressure came from the U.S. decision to revoke Chevron’s authorization to export Venezuelan crude, tightening near-term supply. Chevron has halted its oil operations in Venezuela but plans to retain local staff.

Broader supply concerns were also supported by expectations of stronger seasonal demand and the potential impact of Canadian wildfires on output. Meanwhile, Iran signaled possible cooperation with U.N. nuclear inspectors if talks with the U.S. progress—another variable in the geopolitical backdrop affecting oil markets.

Traders also awaited U.S. inventory data from the American Petroleum Institute and Energy Information Administration, with any signs of tightening stockpiles likely to reinforce the bullish sentiment.

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Brent crude settled at $64.09 a barrel, down 65 cents or 1%, while U.S. West Texas Intermediate (WTI) crude dropped 64 cents, or 1.04%, to $60.89.

Investors were cautious ahead of two key OPEC+ meetings—one on Wednesday, where no major policy shift is expected, and a more pivotal gathering on Saturday, where the group is likely to approve an accelerated output increase for July. Delegates indicated a boost of 411,000 barrels per day is under discussion.

Adding to the bearish tone, the fifth round of nuclear talks between the U.S. and Iran concluded in Rome last week with modest progress but persistent disagreements over uranium enrichment. A deal could bring additional Iranian crude to the market, pressuring prices further. However, if talks collapse, sanctions would likely remain in place, limiting Iranian exports.

Meanwhile, early data suggested U.S. crude stockpiles may have risen by 500,000 barrels last week, reinforcing oversupply concerns. However, some upward support came from a temporary halt in oil and gas operations due to wildfires in Alberta, Canada.

Elsewhere, markets found some relief as President Trump extended trade negotiations with the European Union until July 9, easing immediate tariff fears and helping support fuel demand expectations. Wall Street’s positive response to the reprieve offered some additional stabilization to oil prices.

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Brent crude settled at $64.78 per barrel, up 34 cents or 0.54%, while U.S. West Texas Intermediate (WTI) gained 33 cents, also 0.54%, to close at $61.53.

The gains were partly driven by pre-holiday positioning, with Memorial Day marking the start of peak U.S. summer driving season and typically stronger fuel demand. Analysts cited short-covering as a key factor behind Friday’s rally.

Meanwhile, nuclear talks between American and Iranian officials resumed in Rome. Traders worried that a breakdown in negotiations could lead to heightened tensions or even military action, potentially disrupting Iranian oil exports. Fears that a failed deal might prompt an Israeli strike on Iran also weighed on sentiment.

Further market pressure came from geopolitical developments. President Trump proposed a 50% tariff on EU imports starting June 1, raising concerns about broader trade tensions and their possible drag on global oil demand.

Looking ahead, all eyes are on next week’s OPEC+ meetings. The group is expected to approve another production hike of 411,000 barrels per day for July. Reports also suggest OPEC+ could fully phase out its 2.2 million bpd voluntary cut by October, having already raised output significantly through the spring.

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Brent crude dropped 47 cents, or 0.72%, to settle at $64.44 per barrel, while U.S. West Texas Intermediate closed 37 cents lower, down 0.6%, at $61.20.

The decline followed a Bloomberg report that OPEC+ is weighing a 411,000-barrel-per-day production increase at its June 1 meeting. Although no decision is final, the potential move added to selling pressure already triggered by an unexpected U.S. inventory build.

Analysts said the market is reacting to signs that OPEC+ may be shifting away from price support in favor of defending market share. Kazakhstan’s 2% production boost in May and earlier reports of plans to ramp up group output through November added to oversupply concerns.

Bearish momentum was reinforced by EIA data showing a 1.3 million barrel increase in U.S. crude stocks last week. Demand for gasoline and distillates also slipped, while rising imports hinted at weaker consumption trends.

Losses were partly limited by renewed uncertainty around U.S. sanctions enforcement. Secretary of State Marco Rubio said Chevron’s license to operate in Venezuela will expire on May 27. While markets were cautious due to past extensions, some traders saw potential for near-term supply disruption.

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Brent crude fell 47 cents, or 0.7%, to close at $64.91 a barrel, while U.S. West Texas Intermediate dropped 46 cents, or 0.7%, to settle at $61.57.

Prices had moved higher earlier in the session following a CNN report suggesting Israel may be preparing to strike Iranian nuclear facilities. The report raised concerns about potential disruptions to Iranian oil exports, but those fears eased as diplomatic efforts appeared to regain momentum.

Iran, a top OPEC producer, remains central to market risk calculations. While a military conflict could impact its output or prompt retaliation in the Strait of Hormuz, analysts believe any short-term disruption—estimated at around 500,000 barrels per day—could likely be absorbed by OPEC+ adjustments.

Further pressure on prices came from unexpected builds in U.S. oil inventories. Government data showed crude stocks rose by 1.3 million barrels, while gasoline and distillate inventories increased by 800,000 and 600,000 barrels, respectively.

Additionally, Kazakhstan’s oil production edged 2% higher in May, defying broader OPEC+ efforts to limit global supply and adding to the bearish sentiment in the market.

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Tehran hardened its stance, with Iran’s Supreme Leader Ayatollah Ali Khamenei rejecting U.S. demands to end uranium enrichment, casting further doubt on the likelihood of a nuclear deal. Analysts, including StoneX’s Alex Hodes, warned that the potential for 300,000–400,000 barrels/day of Iranian oil reentering the market is now in question.

The European Union and Britain imposed new sanctions on Russia, following a call between U.S. President Trump and Russian President Putin that failed to yield a ceasefire. Ukraine, meanwhile, urged G7 nations to cut the Russian oil price cap from $60 to $30 per barrel. Despite speculation that a peace agreement could eventually boost Russian oil supply, SEB’s Bjarne Schieldrop noted the outcome remains distant and uncertain given Russia’s commitments under OPEC+.

Economic data from China continued to weigh on sentiment. Slowing industrial output and retail sales reinforced fears of weakening fuel demand from the world’s largest oil importer. However, Goldman Sachs highlighted a late uptick in Chinese trade flows, citing positive momentum tied to the 90-day U.S.-China tariff pause.

In the U.S., traders are watching the Federal Reserve, with at least seven officials scheduled to speak this week. Expectations remain for two rate cuts in 2025, beginning as early as September. Lower interest rates can spur growth and oil demand by easing borrowing costs.

U.S. oil inventories are also in focus. Analysts forecast a 1.2 million-barrel draw in crude stockpiles for the week ending May 16, according to API and EIA reports due Tuesday and Wednesday. If confirmed, this would mark the third draw in four weeks, though still below the five-year seasonal average.

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Iranian Deputy Foreign Minister Majid Takht-Ravanchi said nuclear talks would stall if the U.S. insists Tehran halt uranium enrichment, dampening hopes for a deal that could lift sanctions and release 300,000–400,000 barrels per day of Iranian oil onto the market. Analyst Alex Hodes of StoneX noted that “potential increase looks very unlikely now.”

Meanwhile, Moody’s downgrade of the U.S. sovereign credit rating raised concerns about the health of the world’s largest oil-consuming economy. Further headwinds came from weaker-than-expected industrial output and retail sales in China, the top global oil importer.

UBS analyst Giovanni Staunovo called the Chinese data “modestly bearish” but noted it was enough to stall crude’s momentum.

Adding to investor caution, U.S. Treasury Secretary Scott Bessent warned that President Trump will move forward with new tariffs on trading partners not negotiating “in good faith,” reinforcing trade-related uncertainty.

Geopolitical risks remain in focus. Russian President Vladimir Putin, after speaking with Trump, signaled openness to a memorandum with Ukraine on a future peace deal. Analysts like Andrew Lipow cautioned that a peace resolution could lead to sanctions relief on Russian oil, adding more supply and downward pressure on prices.

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Despite the supply risks, sentiment improved throughout the week after the U.S. and China—the world’s top two oil consumers—agreed to a 90-day pause in their trade war, boosting demand optimism. Analysts, however, warned that longer-term uncertainty could cap price upside.

OPEC+ production remains a wildcard. While the group continues ramping up supply, weak demand could leave the market oversupplied. Dennis Kissler of BOK Financial noted that strong summer travel demand will be key to balancing rising output.

Geopolitical developments added complexity. Russia and Ukraine failed to reach a ceasefire, and Israel launched new strikes on Houthi targets in Yemen, heightening concerns over supply security in the region.

On the U.S. supply front, Baker Hughes reported a 2-rig drop, bringing the rig count to 576, the lowest since January 24, 2025. Meanwhile, the U.S. dollar strengthened, bolstered by higher import prices and weak consumer sentiment, which can pressure oil by making it more expensive for foreign buyers.

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