Oil prices slipped on Friday and posted a second consecutive weekly decline as the Opec+ alliance prepares for its meeting this weekend, where it is expected to announce its third major output increase.
Brent, the benchmark for two thirds of the world's crude, fell 0.39 per cent to settle at $63.90 per barrel. West Texas Intermediate, the gauge that tracks US crude, dropped 0.25 per cent to close at $60.79 a barrel.
Brent posted a weekly loss of nearly 0.5 per cent, while WTI dropped 0.7 per cent for the week. So far this year, they have retreated by more than 15 per cent and 14 per cent, respectively.
Concerns about a global economic slowdown due to US President Donald Trump’s tariffs on trade partners, and retaliatory measures, have put pressure on oil prices.
The oil alliance's meeting on Saturday to decide on July's production levels comes amid global trade tensions that have cooled demand prospects, analysts say.
"The group is expected to bring an additional 411,000 barrels per day to the market starting in July, about 1 per cent of current production, citing rising demand as official justification," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
Opec may be trying to “appease Trump” or encourage some member states who were non-compliant in the past to abide by the quotas, she said.
"Whatever the rationale, if trade tensions persist, the rising supply could send oil prices meaningfully lower."
Looking ahead to the rest of the year, a drop of another $10 per barrel in the second half "can’t be ruled out", Ms Ozkardeskaya added.
The V8 (voluntary eight) Opec+ group still sees room for the market to absorb additional barrels, said Giovanni Staunovo, strategist at UBS Switzerland.
"Higher temperatures require more oil to generate power to cool buildings, the Hajj pilgrims will further support travel demand, but also sanctions weighing on exports from Venezuela drive demand for barrels from the Middle East," he added.
Despite the 411,000 bpd quota increase for May, Opec+ crude exports are stable compared with April, suggesting "higher compliance and domestic demand keep exports in check", he added.
Earlier this week, the UAE's Minister of Energy and Infrastructure Suhail Al Mazrouei said that, despite a growing focus on renewable energy, Opec+ should be “mindful” about oil demand.
The oil group, led by Saudi Arabia and Russia, is “doing its best” to balance the market and ensure there is enough investment into supply, he said.
“If this group was not there, there will be chaos … you will be seeing shocks and that is not good news for consumers,” the minister added.
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- US sanctions on Iran’s energy industry and exports took effect on Monday, November 5.
- Washington issued formal waivers to eight buyers of Iranian oil, allowing them to continue limited imports. Iraq did not receive a waiver.
- Iraq’s government is cooperating with the US to contain Iranian influence in the country, and increased Iraqi oil production is helping to make up for Iranian crude that sanctions are blocking from markets, US officials say.
- Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, pumped last month at a record 4.78 million barrels a day, former Oil Minister Jabbar Al-Luaibi said on Oct. 20. Iraq exported 3.83 million barrels a day last month, according to tanker tracking and data from port agents.
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- The country stopped trucking Kirkuk oil to Iran about three weeks ago, in line with U.S. sanctions, according to four people with knowledge of the matter who asked not to be identified because they aren’t allowed to speak to media.
- Oil exports from Iran, OPEC’s third-largest supplier, have slumped since President Donald Trump announced in May that he’d reimpose sanctions. Iran shipped about 1.76 million barrels a day in October out of 3.42 million in total production, data compiled by Bloomberg show.
- Benchmark Brent crude fell 47 cents to $72.70 a barrel in London trading at 7:26 a.m. local time. U.S. West Texas Intermediate was 25 cents lower at $62.85 a barrel in New York. WTI held near the lowest level in seven months as concerns of a tightening market eased after the U.S. granted its waivers to buyers of Iranian crude.
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