Oil prices eased on Friday, heading for a second consecutive weekly decline, as concerns about a potential U.S.-Iran conflict, which had briefly boosted crude earlier in the week, receded, and fresh supply forecasts added downward pressure.
By mid-morning in Asia, Brent crude was trading around $67.4 a barrel, while U.S. West Texas Intermediate (WTI) hovered near $62.7, with both benchmarks slightly lower on the day after steep losses in the previous session. Brent is on track to fall about 0.8% this week, with WTI down an estimated 1.1%.
Earlier in the week, oil markets were buoyed by fears that heightened tensions between the United States and Iran over Tehran’s nuclear programme could disrupt Middle Eastern supply. However, comments on Thursday by U.S. President Donald Trump suggesting that a deal with Iran could be reached within a month helped ease the near-term geopolitical risk premium embedded in prices.
Analysts said the fading threat of direct conflict removed one of the primary drivers of recent price strength. “Oil prices are lower amid signs the U.S. is seeking more time to reach a nuclear deal with Iran, reducing the near-term geopolitical risk premium,” wrote one market strategist.
At the same time, a monthly report by the International Energy Agency (IEA) projected that global oil demand growth in 2026 will be weaker than previously expected, with overall supply forecast to exceed consumption, suggesting a persistent surplus.
The bearish outlook on demand was amplified by data showing a large build in U.S. crude inventories and indications that Venezuela’s oil output could return toward pre-blockade levels later this year. According to industry estimates, Venezuelan crude production, which had plummeted under sanctions and export restrictions, may rise from around 880,000 barrels per day (bpd) to about 1.2 million bpd by mid-2026.
The prospect of growing Venezuelan supply, alongside resilient global output from other producers, has reduced upward pressure on prices, even as geopolitical headlines continue to influence trader sentiment.
While crude benchmarks have fallen this week, analysts point out that prices have not collapsed further despite bearish fundamentals, suggesting that downside momentum may be slowing. A recent increase in Russian seaborne exports and ongoing supply discipline among some OPEC+ producers have also offered a degree of support.
However, the overall picture remains tilted toward softer prices in the near term as demand growth expectations are revised lower and inventories remain elevated.
Investors will be watching upcoming economic data, OPEC+ policy statements and diplomatic developments for fresh cues on the direction of oil markets. Any unexpected geopolitical flare-ups, shifts in demand trends, or surprises in supply flows, especially in key regions like the Middle East or Venezuela, could quickly reshape market dynamics.
For now, the combination of receding conflict risk and forecasts of an oversupplied market has kept crude on track for its second straight weekly drop, tempering the gains seen earlier in the year and underscoring the complex interplay between geopolitics and fundamentals in the global oil market.
