Oil Prices Slide Toward First Weekly Loss Since April as OPEC+ Eyes Supply Hike

SINGAPORE, May 23, 2025 — Oil prices fell for a fourth consecutive session on Friday, poised for their first weekly decline in three weeks, driven by expectations of increased OPEC+ production and ongoing U.S.-Iran nuclear talks. Brent crude futures dropped 0.5% to $64.13 per barrel, while U.S. West Texas Intermediate (WTI) crude futures also fell 0.5% to $60.87 per barrel. The market is bracing for a potential 411,000 barrels per day (bpd) output hike from OPEC+ in July, following nearly 1 million bpd in increases from April to June.

Meanwhile, the fifth round of U.S.-Iran nuclear negotiations, set for Friday in Rome, could ease sanctions and add Iranian oil to global supply, further pressuring prices. Despite recent geopolitical tensions, including reported Israeli preparations to strike Iranian nuclear facilities, a significant U.S. crude inventory build has heightened bearish sentiment.

OPEC+ Supply Hike Looms Large

The oil market is under renewed pressure as OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, considers another substantial production increase. Discussions at a June 1 meeting may finalize a 411,000 bpd hike for July, adding to the nearly 1 million bpd already introduced since April. This supply surge has offset earlier market jitters triggered by reports of potential Israeli strikes on Iranian nuclear sites and new EU and UK sanctions on Russia’s oil trade.

Analysts at ING forecast Brent crude to average $59 per barrel in the fourth quarter of 2025, reflecting expectations of a supply glut. Real-time data indicates global crude inventories have risen by approximately 150 million barrels since mid-February, with U.S. storage demand reaching levels not seen since the COVID-19 pandemic, according to storage broker The Tank Tiger.

U.S.-Iran Nuclear Talks Add Uncertainty

The fifth round of U.S.-Iran nuclear negotiations, scheduled for May 23 in Rome, is a focal point for traders. A potential deal could lift U.S. sanctions, allowing Iran to boost oil exports by an estimated 400,000 to 800,000 bpd, further flooding the market. Recent statements from U.S. President Donald Trump suggest progress, though Iranian officials remain cautious, with Foreign Minister Abbas Araqchi emphasizing the complexity of the talks.

Tensions escalated earlier this week with reports of Israel preparing to strike Iranian nuclear facilities, though OPEC+’s supply flexibility could offset any disruptions, with analysts estimating a potential 500,000 bpd supply hit if Iran retaliates by blocking the Strait of Hormuz.

Did You Know?
The Strait of Hormuz, a critical chokepoint for global oil trade, handles about 20% of the world’s oil supply, making it a key geopolitical flashpoint in U.S.-Iran tensions.

Demand Concerns and Inventory Builds Weigh In

Bearish sentiment is compounded by weakening demand signals and rising inventories. The U.S. Energy Information Administration reported a 3.5 million-barrel crude stockpile increase last week, against expectations of a 1.1 million-barrel draw. The American Petroleum Institute noted a 2.499 million-barrel build for the week ending May 16, signaling oversupply. U.S.-China trade tensions, despite a 90-day tariff truce, continue to cloud demand forecasts, with analysts warning that a prolonged trade war could halve China’s oil demand growth.

The International Energy Agency recently raised its 2025 global oil demand growth forecast to 740,000 bpd but noted economic headwinds and electric vehicle adoption could temper growth to 650,000 bpd later this year.

Market Outlook and Key Indicators

As traders await Baker Hughes’ U.S. oil and gas rig count data, a leading indicator of future supply, market sentiment remains cautious. U.S. drillers recently cut rigs by four to 479, suggesting a potential slowdown in output growth. However, OPEC+’s aggressive supply strategy and the prospect of Iranian oil re-entering the market keep prices under pressure.

Brent and WTI are down 1.9% and 2.5% this week, respectively, erasing gains from the previous two weeks driven by easing U.S.-China trade tensions. Analysts warn that prices could dip further if OPEC+ confirms the July hike and nuclear talks progress, though seasonal travel demand may provide some support.