Crude oil prices are on track for a second weekly decline as concerns over a U.S.-Iran escalation subside and geopolitical risk premium decreases.
The International Energy Agency revised its 2026 oil demand growth prediction downward to 850,000 barrels daily, which caused a 3% drop in prices.
The oil market is estimated to be in a surplus in 2026, with supply projected to rise by 2.4 million barrels per day, though recent supply plunges have been noted due to weather and disruptions in Kazakhstan.
Crude oil prices began trade with a decline today, set for the second consecutive weekly loss as fears of a U.S.-Iran escalation faded.
At the time of writing, Brent crude was trading at $67.36 per barrel, with West Texas Intermediate at $62.66 per barrel, both essentially unchanged on Monday but down from higher levels seen earlier in the week.
“Signs the U.S. is seeking more time to reach a nuclear deal with Iran, reducing the near-term geopolitical risk premium,” have pressured prices, according to IG analyst Tony Sycamore, as quoted by Reuters.
ING commodity analysts, meanwhile, pointed to data released this week by OPEC and the U.S. Energy Information Administration, noting that the market had largely ignored the EIA data, which showed an increase in both oil inventories and in production, at 8.53 million barrels and 498,000 barrels daily, respectively.
OPEC, on the other hand, had a bullish report for oil traders, keeping its demand growth projections unchanged at 1.38 million barrels daily for this year and 1.34 million barrels daily for 2027. OPEC production, however, fell by 439,000 barrels daily last month, mostly resulting from disruptions in Kazakhstan.
The latest monthly oil report of the International Energy Agency, however, prompted a 3% decline in oil prices on Thursday. The IEA revised down its demand growth predictions to 850,000 barrels daily, after last month it made an upward revision to that prediction, to 930,000 barrels daily.
The IEA also confirmed its estimate that the oil market will be in a surplus in 2026, with supply set to rise by 2.4 million bpd in 2026, to 108.6 million bpd. Growth will be roughly evenly split between non-OPEC+ and OPEC+ producers, the agency said. Last month, however, global oil supply plunged by 1.2 million bpd to 106.6 million bpd, as severe winter weather disrupted North American operations, in addition to the Kazakhstan decline.
Credit: Oilprice.com
