OPEC+ Supply Outlook and Iran Deal Keep Bulls in Check
While prices are on track for a modest weekly gain—about 1%—the potential for increased supply continues to cap upside. OPEC+ is pressing ahead with its plan to unwind voluntary production cuts, a move that adds barrels into an already sensitive market. Ongoing nuclear negotiations between the U.S. and Iran also threaten to expand global crude supply, with ING estimating Iran could add up to 400,000 barrels per day if sanctions are lifted.
The pressure intensified following remarks by U.S. President Donald Trump suggesting progress in talks, though sources confirmed key issues remain unresolved. Iranian barrels have continued flowing, particularly to China, dampening bullish sentiment around any near-term supply constraints.
Federal Reserve and China Trade Talks Offer Some Demand Support
Offsetting the supply concerns was optimism tied to macroeconomic developments. The market got a brief boost from the trade ceasefire between the U.S. and China. The two economic heavyweights agreed to a 90-day pause in tariff escalations, easing fears of a demand slump driven by slower global growth. Still, analysts caution the limited duration of the agreement and the lack of clarity on long-term trade policies restrain any sustained price rally.
Traders are also eyeing the U.S. Federal Reserve for signs of interest rate cuts, which could buoy economic growth and support oil demand. However, no definitive signals have emerged, leaving rate speculation in limbo.
IEA Supply Projections Add to Cautious Tone
Adding further caution, the International Energy Agency raised its 2025 global oil supply growth forecast by 380,000 barrels per day. While demand projections were also slightly revised up, the net result pointed to a projected surplus, reinforcing the market’s hesitancy to push higher.
