Oil prices are on track for a weekly decline on Friday, as easing geopolitical tensions between the US and Iran reduced risk premiums and shifted market focus toward improving supply expectations, while supply disruptions, sanctions-driven trade shifts, and persistent regional risks prevent a deeper decline.
International benchmark Brent crude traded at $67.40 per barrel at 2 p.m. local time (1100 GMT), down 3.3% from last Friday's close of $69.73.
US benchmark West Texas Intermediate (WTI) fell 3.5% to $63.15 per barrel, compared with $65.46 a week earlier.
The main driver of downward pressure is renewed diplomatic engagement between Washington and Tehran. Reports indicating ongoing negotiations over Iran's nuclear program - culminating in the start of Omani-mediated indirect talks between US and Iranian delegations - ease fears of potential supply disruptions in the Middle East.
The talks, conducted through separate meetings with Omani officials who relay messages between the two sides, signal a diplomatic channel remains open, encouraging profit-taking after the previous week's rally and removing part of the geopolitical premium embedded in crude prices.
Additional pressure comes from signals that OPEC+ maintains its current production strategy, with several members reiterating commitments to gradually restore output depending on market conditions. Expectations that restrained but steady supply normalization could continue over the coming months reinforce concerns about a more balanced - or potentially looser - global supply outlook.
Trade developments also contribute to the softer tone. Announcements related to new trade arrangements and tariff adjustments involving major oil-consuming economies strengthen expectations that shifts in trade flows could redirect crude purchases toward alternative suppliers, further easing immediate supply concerns in global markets.
However, the weekly decline remains limited as several supply-side risks and geopolitical uncertainties provide offsetting support.
Severe winter weather across large parts of the US disrupts production, refining activity and export operations, temporarily removing significant volumes of crude supply from the market and tightening short-term balances.
The weather-related outages are reflected in sizeable inventory draws, reinforcing expectations of tighter near-term supply in the world’s largest oil-consuming country.
Geopolitical risks also continue to underpin prices despite diplomatic efforts. Ongoing military deployments in the Persian Gulf and persistent uncertainty surrounding the outcome of US-Iran negotiations keep the possibility of regional supply disruptions in focus, preventing sharper declines.
Iran's strategic location near the Strait of Hormuz,a key transit route for global oil shipments, maintains a structural risk premium in the market.
Sanctions-related developments in the Americas add another layer of uncertainty. Washington's tightening of measures targeting oil flows to Cuba, including tariffs on countries supplying crude to the island, disrupts regional trade routes and raises concerns about localized supply constraints.
The halt of Venezuelan shipments to Cuba following political upheaval further complicates regional energy logistics, highlighting the broader ripple effects of sanctions on crude flows.
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr