Oil prices ticked higher on Friday, capping a volatile week that saw gains of over 1% as optimism surrounding U.S.-China trade relations offset concerns over a potential return of Iranian oil to the market.
Brent crude futures climbed 17 cents, or 0.26%, reaching $64.70 per barrel by 0007 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude advanced 18 cents, or 0.29%, to $61.80.
This modest rebound followed a sharp 2% drop in the previous session after former U.S. President Donald Trump revealed that the U.S. was nearing a nuclear agreement with Iran and that Tehran had “sort of” agreed to the terms. However, a source familiar with the matter noted that significant gaps still need to be resolved.
Earlier in the week, oil prices had surged as the U.S. and China—the world’s largest oil consumers—agreed to a 90-day pause in their trade war, including a rollback of key tariffs. The agreement lifted market sentiment and boosted expectations for global oil demand.
Supply Outlook and Geopolitical Risk Still in Focus
Despite the bullish sentiment from the trade truce, the market remains cautious due to ongoing supply-side risks. A finalized U.S.-Iran deal could reintroduce substantial Iranian oil supplies, exerting downward pressure on prices.
Adding to this concern, the International Energy Agency (IEA) on Thursday revised its 2025 global supply forecast upward. It now anticipates an increase of 1.6 million barrels per day, 380,000 bpd higher than the previous estimate. This surge is expected as Saudi Arabia and other OPEC+ members gradually unwind their production cuts.
ANZ Bank highlighted that easing geopolitical risks are putting additional weight on market sentiment, which is already under pressure from rising OPEC+ supply.
Conclusion:
While the pause in U.S.-China trade tensions has given oil prices some breathing room, the potential return of Iranian barrels and increasing global output may limit further upside. Traders are likely to remain watchful as geopolitical negotiations and supply data unfold.
