During the Friday Asian trading session, international crude oil prices showed limited movement as the market remained highly attentive to news of a near agreement on the US-Iran nuclear deal, with traders closely assessing its potential impact on global oil supply dynamics.
By 9:00 PM Eastern Time (9:00 AM the following day in Beijing), June delivery Brent crude futures stood at $64.55 per barrel, virtually unchanged from the previous trading day. Meanwhile, WTI crude futures rose slightly by 0.1% to reach $61.22 per barrel. Although oil prices fell by more than 2% on Thursday, optimistic sentiments driven by a temporary halt in US-China tariff increases earlier in the week kept the two major crude contracts poised for weekly gains.
Nuclear Deal Nearing Agreement, Concerns Over Iranian Oil Returning to Supply Chain
Progress in US-Iran nuclear talks became the dominant theme of the week. On Thursday, US President Trump stated that the two sides were "very close" to reaching a deal, noting that Iran had "to some extent" accepted the negotiation terms. NBC cited Iranian Supreme Leader's advisor Ali Shamkhani saying Iran was willing to sign the nuclear deal, provided the US completely lifted economic sanctions.
Should the agreement be reached and sanctions lifted, Iranian oil could quickly return to the international market. Historical data shows that before the sanctions were reinstated in 2018, Iran's daily crude oil capacity was around 3.8 million barrels, whereas the current export volume is only 1.6 million barrels per day. The increase in capacity would significantly add pressure to global supply.
IEA Increases Global Supply Growth Forecast, Demand Growth May Slow
Besides the Iranian factor, investors are also focusing on the International Energy Agency's (IEA) global oil supply outlook released on Thursday. The IEA forecasts that with OPEC+ gradually exiting the production cut agreement, global oil supply will increase by about 1.6 million barrels per day by 2025, with an additional increase of 970,000 barrels per day by 2026.
The IEA also warned that signs of slowing global oil demand growth are emerging and will be closely monitored in the future, introducing new uncertainties to the oil market outlook.
US Economic Data Also Influences
Meanwhile, US inflation data provided new insights for the market. Data released on Thursday showed that the US Producer Price Index (PPI) for April unexpectedly fell by 0.5%, far below the anticipated 0.2% growth, marking the largest single-month drop in service costs since 2009. This data heightened concerns about a slowdown in the US economy, exerting some pressure on oil prices.
In summary, the oil market remains cautious amid multiple intersecting variables. On one hand, Iran's potential return to the market complicates the supply and demand outlook; on the other hand, rising global supplies, slowing demand, and weak signs from the US economy collectively pose upward challenges to oil prices. In the coming days, the market will continue to focus on developments in the nuclear deal and macro signals from major economies to determine the next movement in oil prices.
