Oil prices declined over 9% this week as easing geopolitical tensions between the US and Iran reduced concerns over Middle East supply disruptions, while expectations of higher OPEC+ production and rising US crude inventories added further downward pressure.
International benchmark Brent crude traded at $81.81 per barrel at 3 p.m. local time (1200 GMT), down 9.21% from last Friday's close of $90.11.
US benchmark West Texas Intermediate (WTI) traded at $76.71 per barrel, decreasing 9.4% from $84.67 a week earlier.
The week's decline was driven by renewed optimism over diplomatic efforts between Washington and Tehran after US President Donald Trump said talks with Iran had resumed and were making progress.
Expectations that a potential agreement could reduce the risk of supply disruptions through the Strait of Hormuz prompted investors to scale back the geopolitical risk premium that had supported oil prices in July, despite continued uncertainty over the final outcome of the talks.
- Higher supply expectations pressure prices
Expectations of higher oil supply also weighed on prices.
Major OPEC+ producers agreed to increase collective production by 188,000 barrels per day from September as part of the group's gradual rollback of voluntary production cuts introduced in 2023, adding to expectations of a better-supplied market.
Meanwhile, US crude inventories unexpectedly rose by about 2.5 million barrels last week, defying forecasts for a decline and signaling looser near-term market conditions.
Despite the broader downward trend, oil prices trimmed some losses toward the end of the week as uncertainty surrounding the Strait of Hormuz prevented a steeper decline.
Iranian Deputy Foreign Minister Kazem Gharibabadi said an agreement with Oman on future shipping arrangements in the Strait of Hormuz was nearing completion.
At the same time, reports that Iran's parliament was reviewing legislation that could restrict the passage of vessels from countries it considers hostile kept concerns over regional supply risks alive.
Lingering uncertainty provided some support to prices but was insufficient to offset broader market sentiment driven by improving diplomatic prospects and expectations of higher supply.
By Humeyra Ayaz
Anadolu Agency
energy@aa.com.tr
