Oil prices edged up on Friday, heading for a second consecutive weekly gain on easing US-China trade tensions, although the optimism was somewhat offset by higher supply expectations from Iran and OPEC+.
Brent crude futures were up 29 cents, or 0.5%, at $64.82 per barrel at 1054 GMT, while US West Texas Intermediate crude futures rose 27 cents, or 0.4%, to $61.89.
Both contracts fell more than 2% in the previous session on the prospect of an Iranian nuclear deal, which could result in more barrels being released onto the global market.
“The enthusiasm resulting from progress in relations between the US and China allowed the oil price to recover,” said Harry Tchiliguirian, group head of research at Onyx Capital Group, Reuters reported.
“But OPEC+ accelerates the unwinding of its voluntary supply cuts and the US-Iran nuclear talks are still ongoing, keeping the barrels of the latter still flowing to China.”
US President Donald Trump said the US was nearing a nuclear deal with Iran, with Tehran “sort of” agreeing to its terms. However, a source familiar with the talks said there were still issues to resolve.
ING analysts wrote in a note that a nuclear deal lifting sanctions would allow Iran to increase oil output, resulting in additional supply of around 400,000 barrels per day.
Despite the potential supply pressure, both Brent and WTI are up around 1.5% so far this week.
Sentiment was boosted when the US and China, the world’s two biggest oil consumers and economies, agreed to a 90-day pause on their trade war during which both sides would sharply lower trade duties.
The hefty reciprocal tariffs had raised fears of a sharp blow to global growth and oil demand.
Analysts at BMI, a unit of Fitch Solutions, said in a research report, however, that “while the 90-day cooling off period leaves the door open for additional progress on lowering trade barriers on both sides, the uncertainty on longer-term trade policy will limit price upside.”
Adding to market concerns was an expected surplus.
The International Energy Agency on Thursday hiked its 2025 global supply growth forecast by 380,000 bpd and projected a surplus for next year, despite a minor upward revision of its 2025 global oil demand forecast by 20,000 bpd.
Investors were also watching for signs of interest rate cuts by the US Federal Reserve, which could bolster the economy and oil demand.
