Oil prices falls as OPEC+ considers output hike before US-Iran talks
Crude oil prices fell for a third consecutive trading day on Thursday ahead of the US-Iran nuclear talks. Traders are growing concerned about the possible return of oil supply from Iran, which holds around one-third of the world's oil reserves.
Adding to the pressure, a Bloomberg report stated that the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) is considering a third consecutive production hike in July, compounding fears of an oversupplied market.
Oil prices continued to decline during Friday's Asian session. As of 4:40 am CEST, Brent futures were down 0.59% to $64.06 per barrel, while West Texas Intermediate (WTI) futures fell 0.6% to $60.83 per barrel—both touching their lowest levels in over a week.
Crude prices have experienced notable volatility in recent weeks as market participants weigh rising geopolitical tensions against mounting supply from major oil-producing nations. Broader macroeconomic factors—such as easing US-China trade tensions and renewed selling in US Treasuries—have also been influencing oil market movements.
Earlier in the week, prices briefly spiked following a CNN report that Israel was preparing to launch strikes against Iran's nuclear facilities, citing intelligence from US sources. However, the rally proved short-lived, with analysts suggesting the warning may have been a strategic move by the US to exert pressure on Iran ahead of the nuclear negotiations.
The geopolitical boost was quickly overshadowed on Wednesday by data showing a surge in US crude inventories. According to the Energy Information Administration (EIA), US oil stockpiles rose to 443.2 million barrels in the week ending 16 May—the highest level since July 2024. The report also indicated that net US crude imports had increased for a third consecutive week, while domestic demand remained weaker than expected.
News about OPEC+'s potential acceleration in production hike sent the oil price down further on Thursday. The oil production cartel is reportedly considering hiking crude output by 411,000 barrels per day (bpd) in July. The decision is yet to be finalised on 1 June when the group holds the next meeting.
The group, which accounts for around 40% of global oil supply, has jointly reduced production by approximately 2.2 million bpd in 2023. The quicker-than-expected phased rollback began with a 135,000 bpd increase in April, tripling to 411,000 bpd in May and June. The acceleration is seen as a punitive measure against members which failed to comply with agreed production quotas, with Kazakhstan and Iraq identified as recent overproducers.
Crude prices have consistently fallen following OPEC+ announcements of larger-than-expected production increases in both April and May. However, the potential July decision may already be priced in by markets—unless the group surprises traders with an even more aggressive supply boost.
The demand outlook remains fragile amid ongoing concerns over slowing global growth, particularly driven by the US tariffs. Crude prices had previously dropped to a four-year low on 9 April and again on 5 May. The oil market rebounded following the US and China's trade talks earlier this month, when the world's two largest economies reached an agreement to pause high tariffs on each other for 90 days.
While near-term pressure remains supply-driven, there is cautious optimism that a sustained recovery in market sentiment, driven by further progress in US tariff negotiations, could support a rebound in oil demand.
'While the immediate pressure comes from the supply side, I believe that in the longer term, further progress on US tariff negotiations with key partners could revive demand and offer more meaningful support for oil,' Dilin Wu, a research strategist at Pepperstone Australia, said.
The EU is a 'beacon of stability' when it comes to climate policy on the world stage, said MEP Lídia Pereira on Thursday.
Speaking at the Brussels' Economic Forum, the member of the European People's Party (EPP) said that the bloc must not resort to 'dangerous' solutions when tackling the climate crisis.
'If we want to find solutions, we have to find solutions with the moderates,' she said.
Pereira was responding to an argument for degrowth, proposed at the forum by Timothée Parrique, an economist and researcher at HEC Lausanne.
'This [degrowth] is not a political statement… this is a scientific reality that we have to grapple with,' Parrique said.
'There is no point being first when you're going in the wrong direction…economic growth has lost all correlation with quality of life.'
He continued: 'I can tell you with confidence wealth is not trickling down and pollution is not trickling out.'
The theory of degrowth, which has been around since the 1970s, warns against continual economic growth and instead advocates for economic shrinking. Proponents argue that the world doesn't have enough resources to make endless growth a realistic goal, meaning we need to scale back our consumption.
Although supported by some eminent academics, critics argue that degrowth would massively destabilise the interconnected global economy, resulting in unemployment and deepening inequality. They also argue that it's a tough political sell.
Even so, 'the costs of action are much lower than the cost of inaction,' stressed Parrique on Thursday, noting that growth-focused policies will have a 'huge drawback' in the long term. He suggested that public figures should do more to promote public awareness around this.
Lídia Pereira argued that the green transition can go hand in hand with the EU's push to become more competitive.
She pointed to subsidies in China and the US, notably former President Biden's Inflation Reduction Act (IRA), and said that Europe must do more to foster 'strategic autonomy in clean technologies'.
This is currently held back by a lack of progress on a fully-integrated capital market in the EU, she said. As a result, companies can't get their hands on the capital they need to compete on a global scale. Country-specific laws are still a hindrance to cross-border funding, forcing companies to be more reliant on banks, rather than private investors, for loans.
The EU is aiming to be climate neutral by 2050 and member states have specific strategies on how they plan to achieve this.
Pereira suggested that Europe could act as a pioneer for other economies when it comes to fulfilling climate commitments, which are becoming ever-more urgent.
This comes as, across the Atlantic, the US administration is pulling economic resources from initiatives designed to support the green transition.
Donald Trump in January signed an order to withdraw the US from the Paris climate agreement for the second time. The president is also pushing for a renewed focus on fossil fuels, as opposed to renewable technologies, and is rolling back elements of the IRA.
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