Oil prices edged lower on Friday, capping a second straight week of declines as traders reassessed geopolitical risks in the Middle East while grappling with a darkening demand outlook and the prospect of additional supply hitting global markets.
Brent crude, the international benchmark, fell 12 cents to $67.40 per barrel by mid-morning European trading, a modest retreat following Thursday’s sharp 2.7% sell-off. U.S. West Texas Intermediate crude similarly declined 13 cents to $62.71, extending its previous session’s 2.8% drop. For the week, Brent was poised to shed 0.8%, while WTI headed for a 1.1% decline.
The week’s losses mark a notable reversal from earlier gains driven by fears that escalating tensions between Washington and Tehran could disrupt crude flows from the world’s most critical oil-producing region. Those concerns intensified mid-week when speculation mounted that the Trump administration might take military action against Iran over its controversial nuclear program.
However, the geopolitical risk premium evaporated on Thursday after President Donald Trump signaled a potential diplomatic breakthrough, telling reporters the United States could reach a nuclear agreement with Iran within the next month. The president’s comments—a marked departure from earlier bellicose rhetoric—sent prices tumbling as traders recalibrated their risk assessments.
“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,” noted Tony Sycamore, analyst at IG, in Friday morning commentary.
Yet geopolitical developments represented only part of the bearish narrative weighing on crude markets. The International Energy Agency delivered another blow Thursday, revising downward its forecast for global oil demand growth in 2025 while projecting that worldwide supply would outpace consumption—a classic recipe for sustained price pressure.
The demand concerns were compounded by fresh U.S. inventory data showing a substantial build in domestic crude stockpiles, suggesting weaker-than-anticipated consumption in the world’s largest oil-consuming nation. That data, combined with growing expectations of increased Venezuelan production, created what analysts described as a “perfect storm” of bearish factors.
Still, some market observers saw glimmers of resilience in Friday’s trading. “The fact that prices did not extend significantly lower in the face of bearish headlines is noteworthy, suggesting that downside momentum is slowing in the near term,” said Linh Tran, market analyst at XS.com.
Perhaps the most significant supply-side development involves Venezuela, where U.S.-controlled oil sales have generated over $1 billion since the January capture of President Nicolás Maduro, according to Energy Secretary Chris Wright. Wright projected another $5 billion in revenue over the coming months as Venezuelan production ramps up.
The White House confirmed Thursday that the Treasury Department would issue additional sanctions waivers on Venezuelan energy this week, effectively paving the way for increased crude exports from the Latin American nation. Analysts anticipate Venezuelan output could surge from current levels of 880,000 barrels per day to approximately 1.2 million barrels daily—levels not seen since prior U.S. sanctions took full effect.
“There is an expectation that Venezuelan oil supply will return to pre-blockade levels in the months ahead,” Sycamore explained, noting that this anticipated supply increase contributed to Thursday’s accelerated sell-off.
The confluence of easing geopolitical tensions, weakening demand projections, and expanding supply has fundamentally altered the market calculus that prevailed just days earlier. As traders head into the weekend, the question looming over oil markets is whether current price levels adequately reflect these shifting fundamentals—or whether further adjustments lie ahead.
For now, the diplomatic opening with Iran and the Venezuelan supply revival appear to have eclipsed supply disruption fears, leaving crude markets in a decidedly defensive posture as the new trading week approaches.
WHAT YOU SHOULD KNOW
Oil prices fell for a second consecutive week as geopolitical fears subsided following President Trump’s signals of potential diplomacy with Iran, while markets now face mounting pressure from weakening global demand forecasts and the imminent return of Venezuelan oil supply to pre-sanctions levels.
The shift from conflict concerns to oversupply worries represents a fundamental change in market dynamics that could keep crude prices under pressure in the near term.
