Crude oil prices are on course for a weekly loss as easing tensions in the Middle East reduce fears of supply disruptions. Traders pulled back from the war-risk premium that had briefly buoyed prices amid the Israel-Iran conflict.
By Thursday evening, Brent crude had dropped to $68 per barrel, while West Texas Intermediate (WTI) hovered around $65.55—both benchmarks down significantly from last week’s close of $77 and $73, respectively.
Market Shifts Focus to OPEC+ and Tariffs
With regional stability tentatively restored, analysts say the market has turned its attention to upcoming geopolitical and trade developments. OPEC+ is set to meet on July 6, with eight member countries scheduled to implement a 411,000 barrels per day production increase in July 2025, as part of a phased reversal of the 2.2 million bpd voluntary cuts agreed in December 2024. The group may pause or reverse this adjustment depending on evolving market conditions.
“We anticipate these supply hikes will push the market into surplus by year-end—unless Middle East tensions flare up again,” ING strategists Warren Patterson and Ewa Manthey wrote in a client note.
At the same time, optimism is growing around U.S. tariff negotiations. Washington already secured a trade agreement with China earlier in June and is expected to finalize deals with 10 additional countries. If successful, these agreements could eliminate tariff risks that have weighed on energy markets in recent months.
Inventory Draws Offer Temporary Lift
Despite the broader downward trend, oil prices saw a modest rebound on Thursday after the U.S. Energy Information Administration (EIA) reported a surprise draw in crude and fuel inventories. Refinery activity also picked up, and demand signals strengthened heading into the summer travel season.
“Crude inventories suddenly look very tight,” noted Phil Flynn, senior analyst at Price Futures Group. He added that inventory trends may cap further downside in prices if demand stays firm.
Weaker Dollar Adds Limited Support
The U.S. dollar weakened this week amid speculation that President Trump may announce his choice for Federal Reserve chair earlier than expected. A softer greenback typically supports oil prices by making dollar-denominated commodities more attractive to international buyers.
Still, the overall picture suggests bearish sentiment dominates the oil market, at least in the short term. Rising OPEC+ output, waning war fears, and improved trade relations all point to softer prices—unless new supply threats emerge.