Crude oil prices were set for a weekly gain despite a slide earlier today, mostly on renewed optimism about U.S.-Chinese trade negotiations but also on supply uncertainty in Venezuela in Iran.
At the time of writing, Brent crude was trading at $65.15 per barrel, with West Texas Intermediate at $63.18 per barrel, following President Trump’s statement that the latest talks, directly with China’s Xi, had ended in a “very positive conclusion,” and that the U.S. was “in very good shape with China and the trade deal,” as carried by Reuters.
Meanwhile, the likelihood of more U.S. sanctions on Venezuelan oil and the threat of Israeli attacks on Iranian energy infrastructure provided additional support for prices.
“The potential for increased US sanctions in Venezuela to limit crude exports and the potential for Israeli strike on Iranian infrastructure add to upside risks for prices,” BMI analysts said in a note today, adding that “both weaker demand for oil and increased production from both OPEC+ and non-OPEC producers will add to downside price pressures in the coming quarters.”
The BMI note came out after on Thursday the International Energy Agency said in its new World Energy Investment report it expected demand for oil to weaken this year. The IEA also predicted investment in oil and gas exploration would decline by 6% in 2025, in tune with its demand forecast. Demand for oil this year, according to the IEA, is set to decline for the first time since the pandemic lockdowns of 2020.
Supporting the bearish view on oil this week was the news that Saudi Arabia was going to cut its oil prices for Asian buyers yet again – to the lowest in two months. The cut, however, was smaller than analysts expected, suggesting some resilience in demand in the world’s largest importing market.
By Irina Slav for Oilprice.com
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