Oil prices set for weekly loss as diplomatic developments fuel oversupply concerns

Oil prices are poised for a weekly decline on Friday, weighed down by increased production from the OPEC+ alliance, the potential for a ceasefire between Russia and Ukraine, renewed optimism surrounding a US-Iran nuclear deal, and concerns over escalating US-China trade tensions.

The international benchmark Brent crude traded at $65.51 per barrel at 12.02 p.m. local time (0902 GMT), marking a decline of around 2.2% from last week’s closing price of $66.96.

Similarly, the American benchmark West Texas Intermediate (WTI) was trading at $62.48 per barrel, down approximately 1.9% from last Friday’s closing level of $63.72.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, have increased output this month and are expected to continue ramping up production into June.

Eight key producers—Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman—are set to meet on May 5 to discuss future production levels.

Diplomatic developments are also influencing market sentiment. US efforts to mediate the Russia-Ukraine conflict, along with ongoing negotiations with Iran regarding its nuclear program, have heightened expectations of increased supply, exerting downward pressure on prices.

During a weekly press briefing in Moscow on Thursday, Russian Foreign Ministry Spokesperson Maria Zakharova confirmed that dialogue with the US on resolving the Ukraine crisis is ongoing, with both nations aiming for a long-term resolution.

Meanwhile, US President Donald Trump stated on Thursday that nuclear talks with Iran are progressing ‘very well.’

The US and Iran have held two rounds of high-level negotiations in Oman and Rome over the past two weeks. Trump has set a 60-day deadline for a deal, though the exact closing date remains uncertain. Another round of working-level discussions is expected on Saturday.

Advancements in nuclear talks between Washington and Tehran further exerted downward pressure on oil prices, strengthening market expectations of an uninterrupted supply.

Tensions between the US and China also continue to impact oil markets. Concerns about weakening global demand have resurfaced amid ongoing trade frictions.

On Thursday, Chinese state media reported that Beijing is not currently engaged in tariff negotiations with Washington, contradicting Trump’s earlier claims that talks were underway.

However, despite denials from Beijing, Trump claimed that tariff negotiations with China were ongoing, and overall optimism surrounding the talks limited downward price movements.

In addition to China, the US is pursuing trade talks with other countries. On Thursday, Treasury Secretary Scott Bessent said negotiations with South Korea might be advancing faster than expected.

On the other hand, President Trump’s continued pressure on Federal Reserve (Fed) Chairman Jerome Powell to cut interest rates has also added a layer of complexity to the market outlook.

Trump warned that the US economy could slow unless ‘Mr. Too Late, a major loser, lowers interest rates.’ These comments have raised concerns about the Fed’s independence, though analysts note that lower interest rates—combined with a weaker dollar and stronger economic activity—could support oil prices in the months ahead.

By Duygu Alhan