Background on Key Players and Context
On this Friday, oil futures experienced a slight decline due to thin trading volumes ahead of the U.S. Independence Day holiday and anticipation of an expected production increase by OPEC+. The two primary oil benchmarks, Brent and West Texas Intermediate (WTI), saw a drop of 0.84% and 0.88%, respectively, trading at $66.41 per barrel.
Market Performance and OPEC+ Expectations
Both oil contracts are on track for weekly gains, with Brent trading 0.6% above last Friday’s close and WTI around a 1.4% increase.
Eight OPEC+ countries are likely to raise oil production again in August, during a meeting on Saturday, with the aim of increasing their market share.
“If the group decides to increase production by another 411,000 barrels per day in August, as expected for the fourth consecutive month, oil balance estimates for the second half of the year will be reassessed, suggesting an acceleration in global crude reserve growth,” stated Tamas Varga, an analyst at PVM.
Geopolitical Factors Influencing Oil Prices
Oil prices were also under pressure from a report by the news website Axios, indicating that Washington plans to resume nuclear talks with Iran next week. Meanwhile, Iranian Foreign Minister Abbas Araqchi stated that Tehran remains committed to the Nuclear Non-Proliferation Treaty.
U.S. President Donald Trump mentioned on Thursday that he would meet with Iranian representatives “if necessary,” despite the U.S. imposing new sanctions targeting Iran’s oil trade.
Furthermore, uncertainty surrounding U.S. tariff policy has resurfaced as the deadline for higher tariffs approaches, following a 90-day pause.
Positive Oil Price Forecast by Barclays
Barclays has upgraded its Brent oil price forecast, predicting $72 per barrel for 2025 (an increase of $6) and $70 per barrel for 2026 (an increase of $10) due to improved demand outlook.
Key Questions and Answers
- What caused the recent drop in oil prices? Oil futures fell slightly on reduced trading volumes ahead of the U.S. Independence Day holiday and anticipation of an OPEC+ production increase.
- Which countries are expected to raise oil production? Eight OPEC+ countries, including Saudi Arabia and Russia, are likely to increase production in August.
- How will the resumption of U.S.-Iran nuclear talks impact oil prices? There is uncertainty about the potential lifting of sanctions on Iran’s oil exports, which could increase global supply and put downward pressure on prices.
- What is Barclays’ updated outlook for oil prices? Barclays has raised its forecast for Brent oil prices to $72 per barrel in 2025 and $70 per barrel in 2026, reflecting a more optimistic demand scenario.
