Oil prices ended the week on a positive note, driven by a drop in US crude inventories, renewed optimism surrounding US-China trade talks, and expectations of sustained global demand despite rising output from major oil producers.
Brent crude traded at $63.75 per barrel, marking an increase of around 4% from last week’s closing price of $61.31. Similarly, the American benchmark West Texas Intermediate ,WTI, was trading at $60.69 per barrel, up approximately 4.4% from last Friday’s closing level of $58.10.
The increase came despite initial pressure from an announcement by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to boost production levels in June.
The eight member countries plan to raise output by 411,000 barrels per day ,bpd, compared to May as part of a phased plan to unwind voluntary cuts. Markets responded with a short-lived price drop early in the week, reflecting concerns over a potential supply glut.
However, investor sentiment shifted after bargain buying and favourable macroeconomic signals helped prices recover. On Wednesday, oil prices gained further support amid reports that the US and Chinese officials will resume trade talks in Switzerland, marking the first high-level meeting since President Donald Trump imposed sweeping tariffs on China.
The news improved market expectations for global economic growth and future oil demand. Additionally, a drawdown in US crude inventories helped ease supply concerns.
According to data released Thursday by the US Energy Information Administration ,EIA, US commercial crude oil inventories fell by 2 million barrels to 438.4 million barrels last week, indicating healthy demand in the world’s largest oil consumer.
The upward trend was reinforced by the Federal Reserve’s decision to leave interest rates unchanged, which weakened the US dollar and made dollar-denominated oil more attractive for foreign buyers. Analysts also noted a growing market expectation of a possible rate cut in July, which could further support prices.
US and the United Kingdom announced a new trade and economic agreement on Thursday. The deal included tariff reductions on key exports such as steel, aluminium, and automobiles, and was welcomed by investors as a sign of improving trade relations that may stimulate economic activity and energy demand.
On the other hand, the Middle East and South Asia continued to create a cautious tone in oil markets. Israeli Prime Minister Benjamin Netanyahu threatened retaliation against Iran and Yemen after a missile strike targeted Ben Gurion Airport, while rising tensions between India and Pakistan following cross-border clashes also contributed to market uncertainty.
EIA, in its latest Short-Term Energy Outlook, revised down its average Brent crude price forecast for 2025 to $65.85 per barrel, citing projected increases in global inventories. However, near-term prices remain supported by strong demand signals and progress on the trade front.
The UK government is preparing to impose fresh sanctions on a fleet of Russian oil tankers, according to a statement by 10 Downing Street on Thursday. Up to 100 vessels are set to face new restrictions, with Downing Street saying that the tankers have transported more than £18 billion ,$24 billion, worth of cargo since the start of 2024.
The move will be officially announced by Prime Minister Sir Keir Starmer during a summit of North European leaders known as the Joint Expeditionary Force ,JEF, in Oslo.
According to Downing Street, the shadow fleet has “bankrolled the Kremlin’s illegal war in Ukraine” and is believed to include ships that are “decrepit and dangerous”, with some being blamed for “reckless seafaring”.
These concerns follow recent reports of damage to a major undersea cable in the Baltic Sea. Under the new measures, the sanctioned ships will be banned from entering British ports and may be detained if found in UK waters.
Starmer stressed the broader implications of the action, stating, “Every step that increases pressure on Moscow and works towards peace for Ukraine is another step towards security and prosperity in the UK”.
The JEF comprises 10 northern European nations, including Denmark, Norway, and the Netherlands. The group, which serves as a defense coalition, is also expected to announce additional support for Ukraine at the Oslo summit.
