Oil prices held steady on Thursday, supported by growing expectations of a potential increase in OPEC+ production, despite escalating trade tensions between Washington and Beijing and ongoing nuclear tensions between Tehran and Washington. While investors monitor these developments, mixed signals are emerging from the White House regarding tariffs.
In early trading, Brent crude futures rose 8 cents, or 0.12%, to $66.20 a barrel. U.S. West Texas Intermediate crude rose 9 cents, or 0.14%, to $62.36. This slight increase followed a sharp 2% decline in the previous session.
The loss followed reports indicating proposals from some OPEC+ members to accelerate production increases in June. Reuters, citing sources familiar with the matter, reported that the alliance is considering raising production for a second consecutive month, raising market concerns about a potential supply glut. On the other hand, trade tensions between the United States and China have created an unstable climate. The White House has expressed potential flexibility on tariffs, while a spokesperson later denied the administration’s intention to unilaterally reduce tariffs. These discrepancies have undermined investor confidence, despite hopes for a rapprochement in trade negotiations.
Moreover, uncertainty prevails regarding the fate of the nuclear talks between the United States and Iran. This uncertainty directly impacts expectations regarding future Iranian oil supplies.
In this context, analysts at ING Bank commented that the uncertainty is weighing on market sentiment. They added that internal disagreements within OPEC+ are also affecting price trends. They noted that oil lagged behind the rise seen in other risk assets this week due to divisions within the oil alliance.
One country that has sparked controversy is Kazakhstan, which announced that it will put its national interests above its commitments to OPEC+. It confirmed that it may not fully adhere to its production quota, despite consistently exceeding it over past year.
The current tariffs are unsustainable.
Historically, these disputes have led to severe repercussions, including Angola’s withdrawal from OPEC+ in 2023 due to a dispute over quotas. Investors fear a repeat of this scenario, which could spark a new price war.
In addition, US Treasury Secretary Scott Besant stated that current tariffs are unsustainable. He explained that imposing a 145% tariff on Chinese goods and a 125% tariff on US goods harms global growth. He added that any trade talks require a reconsideration of these policies first.
However, despite these statements, the official message from the White House appeared mixed. White House Press Secretary Carolyn Leavitt clarified that the administration does not intend to unilaterally reduce tariffs. This contradiction further complicated the overall picture and increased market uncertainty.
Regarding support factors, it was noted that some investors are still counting on the possibility of progress on the Iranian nuclear issue, which could contribute to price stability in the short term. Furthermore, any improvement in trade relations between China and the US could boost global energy demand.
But challenges remain. Fears of a global economic recession continue to weigh on demand forecasts. Recent data indicates a slowdown in major industrial sectors in Europe and Asia, which could negatively impact oil consumption during the second quarter of 2025.
Separately, investors remain focused on the outcome of upcoming OPEC+ meeting. This meeting may reveal the true intentions regarding adherence to production levels. Many expect the meeting to witness a heated debate on market regulation mechanisms and a more equitable distribution of quotas.
On the other hand, analysts believe that continued fluctuation of prices within this range reflects a state of cautious anticipation in the market, as fundamental factors alone are no longer sufficient to determine direction. Rather, politics, tariffs, and geopolitical issues have become decisive factors in driving markets.
OPEC+ disagreements push oil prices lower despite the rise of risky assets.
While risk appetite pushed investors toward riskier assets, oil fell behind yesterday. Brent crude fell nearly 2%, settling below $87 a barrel. This coincided with escalating disagreements within OPEC+ over production, reinforcing concerns about a potential supply glut in the market.
Kazakhstan declared that it was unable to reduce its oil production, preferring to protect its economic interests over its commitments to the alliance. Commenting on this, ING analysts Ewa Manthey and Warren Patterson noted that these statements undermine OPEC+ unity and increase pressure on crude prices.
Meanwhile, Kazakhstan is pumping far above its production ceiling, benefiting from the expansion of the Tengiz field. This has led to growing calls from other OPEC+ countries to significantly increase supply in June. OPEC+ surprised the market in early April with an increase of 411,000 barrels per day for May, exceeding the original plan of only 138,000 barrels. This unexpected increase comes amid weak global demand prospects. Trade tensions between China and the United States continue to weigh on global consumption, further exacerbating the fragile balance in the energy market.
Despite these challenges, the Brent crude time spread on the Intercontinental Exchange (ICE) has maintained some strength. It continues to trade below $1 per barrel, reflecting tight spot supply. This signal reinforces the prospects for a price balance in the short term, despite ongoing supply pressures.
Conversely, data from the US Energy Information Administration revealed a slight increase in crude oil inventories, amounting to only 244,000 barrels last week. This increase contradicted previous expectations from the American Petroleum Institute, which had indicated a sharp decline of 4.75 million barrels.
Despite this discrepancy, refined products data provided positive signals for the markets. Gasoline inventories fell by 4.48 million barrels.
Markets remain cautious
while distillates fell by approximately 2.35 million barrels. This decline reflects a rise in implied demand, particularly with gasoline consumption increasing by about 952,000 barrels per day compared to the previous week.
Gasoline inventories continued to decline for the eighth consecutive week, reaching their lowest levels since last December. This decline led to higher gasoline margins (RBOB), reflecting improved refining profitability in the short term.
In light of these developments, markets remain in a state of anticipation. Disagreements within OPEC+, on the one hand, and fluctuations in US data, on the other, create a complex mix that increases uncertainty. Therefore, traders are now focusing on the results of the upcoming OPEC+ meeting, which may hold additional surprises regarding production trends during the second half of the year.
In this context, Daniel Heinze, energy expert at Commerzbank, noted that the market currently reacts momentarily to every rumor or statement. He explained that prices could experience significant volatility in the short term if no clear signals emerge from OPEC+ and the White House. In conclusion, despite some slight improvement in prices on Thursday morning, a state of anticipation and anxiety remains dominant. Markets are clearly awaiting concrete steps from decision-makers, whether in Washington, Riyadh, or Tehran, before charting a steady upward or downward trend in the coming period.
