Oil prices head for a second consecutive weekly decline amid signs of a growing supply glut
Oil prices weakened on Friday, heading for a second straight weekly decline as the market reacted to signs of an expanding global supply surplus and efforts by the U.S. to increase economic pressure—and enforce a blockade—on Iran. Weakening demand in the United States is also exerting downward pressure on prices.
Brent crude futures closed up 2 cents (0.02%) at $95.84 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 18 cents (0.20%) to $88.56 per barrel.
Both Brent and WTI recorded a weekly decline of approximately 2.5%. In the previous week, these benchmark crude grades had fallen by 16% and 13%, respectively.
The market has shifted significantly, driven by a reduction in geopolitical risks—specifically those linked to the conflict involving the U.S., Israel, and Iran—as well as a report released Friday by the International Energy Agency (IEA) indicating an increase in the global oil supply surplus.
Trump has suggested that reaching an agreement with Iran is not necessary to end the conflict. This signifies an intensification of economic stress that will have an impact both between the two countries and globally.
While the primary concern just a few months ago was a potential supply shortage, the focus has now shifted toward the risk of a supply glut.
Oil has experienced a highly volatile week. Market sentiment, initially buoyed by hopes of a potential rapprochement between the U.S. and Iran, was later overshadowed by Houthi attacks on Saudi Arabian infrastructure and strikes on tankers transporting crude oil through the Gulf.
The oil market finds itself caught between an increase in supply from the Middle East and a lack of any shift in the negotiating positions between the U.S. and Iran.
The weakness in oil prices is also linked to signs of softening demand in the U.S. An increase in crude oil and fuel inventories points to a relatively sluggish consumption outlook.
On Thursday, the U.S. Energy Information Administration (EIA) announced that U.S. crude oil and fuel inventories rose last week, driven by weaker demand for refined products and an increase in oil imports.
Despite the decline in prices, risks remain regarding oil shipments through the Strait of Hormuz—a critical chokepoint for crude oil exports from major producers in the Middle East.
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