Oil prices exhibited minimal movement in early trading on Friday, with Brent crude and U.S. West Texas Intermediate (WTI) benchmarks remaining almost unchanged from their previous closing levels. Brent futures experienced a marginal decline of three cents to USD 63.73 per barrel, while WTI futures saw a slight increase of four cents to USD 59.22 per barrel. This period of stability follows a significant pullback from the multi-month highs achieved earlier in the week, which had been driven by heightened geopolitical tensions.
The earlier price surge was caused by protests in Iran and subsequent signals from U.S. President Donald Trump that potential military strikes against the nation were under consideration. However, market pressures eased considerably late on Thursday after President Trump indicated that the situation in Tehran was de-escalating, thereby reducing the immediate risk of a disruptive military conflict in the region. Concurrently, bearish sentiment was reinforced by a U.S. Energy Information Administration report, which indicated larger-than-anticipated build in both crude oil and gasoline inventories for the week.
“This prompted a swift unwind of the Iran premium that had propelled oil prices to twelve-week highs, compounded by the latest US inventory data showing a substantial crude build,” said an analyst in a note.
Additional downward pressure emerged from reports that Venezuela had initiated a reversal of its recent production cuts and resumed export activities, introducing more supply into the market.
Future Outlook
Longer-term outlook present a mixed picture. Shell released a bullish long-term forecast on Thursday, projecting in its Energy Security Scenarios that global primary energy demand could rise by 25% by the year 2050. Conversely, the Organization of the Petroleum Exporting Countries (OPEC) stated on Wednesday that it anticipates the oil market to remain balanced through 2026, with demand growth in 2027 expected to mirror the pace set in the current year.
