Supply Worries and Geopolitics Weigh Heavily on Market

Crude oil markets posted sharp losses this week, with traders contending with a barrage of supply-driven headwinds and persistent geopolitical uncertainty. Brent finished down, while WTI sank, as the weight of potential new supply and fragile global demand expectations kept buyers cautious.

Last week, Light Crude Oil Futures settled at $63.02, down $0.99 or -1.55%.

This week, the pivot at $63.06 will control the short-term direction of the market.

A sustained move over this level will indicate the presence of buyers. If this creates enough upside momentum then look for a near-term surge into the 52-week moving average at $69.00. It is controlling the long-term trend which is down.

If traders push the market below $63.06 decisively then watch for a pullback into $59.67, followed by the multi-month low at $54.48.

Iran Nuclear Talks Stoke Supply Fears

Early-week selling pressure intensified after reports of “very good progress” in U.S.-Iran nuclear negotiations. The possibility of Iranian crude re-entering the global market rattled confidence, even as the U.S. simultaneously sanctioned a Chinese refiner for handling Iranian oil. Traders quickly began pricing in future barrels, despite the lack of any finalized agreement, further pressuring prices in an already sensitive market.

Inventory Data Sends Mixed Signals on Demand

U.S. stockpile data added to the confusion. The API reported a large 4.6 million barrel crude draw, initially supporting bullish bets. However, official EIA figures contradicted this with a surprise crude build of 244,000 barrels. Strong draws in gasoline (-4.5 million barrels) and distillates (-2.4 million barrels) hinted at resilient end-user demand, with jet fuel deliveries hitting their highest pace since 2019. Still, the crude build was enough to reinforce broader supply concerns.

Macroeconomic Strains Erode Demand Outlook

Broader economic concerns compounded the bearish tone. The International Monetary Fund cut its U.S. growth forecast to 1.8% for 2025 and raised inflation expectations to 3%, bolstering the case for continued tight monetary policy. Recession odds were raised to 40%, casting a shadow over future oil demand and keeping risk appetite subdued across commodity markets.

OPEC+ Fractures Deepen as Output Talks Heat Up

OPEC+ discord added another bearish layer. While the group plans to lift output by 411,000 barrels per day in May, reports surfaced that some members, led by Saudi Arabia, are pushing for faster increases. Internal tensions—especially with Kazakhstan and Iraq exceeding quotas—raise doubts about OPEC+’s ability to cap supply effectively, which could accelerate the supply surplus narrative if divisions widen.

Trade War Tensions Cap Demand Hopes

Brief optimism over U.S.-China tariff talks quickly faded when China’s foreign ministry denied any active negotiations. Even after Beijing’s selective tariff exemptions, heavy duties remain firmly in place, curbing China’s oil demand growth outlook. Rystad Energy slashed its Chinese demand growth forecast to just 90,000 barrels per day—a major red flag for global consumption trends.

Crude Oil Market Forecast: Bearish Outlook Persists

The near-term oil prices forecast remains bearish, with growing supply risks, confusing inventory signals, and persistent macroeconomic headwinds undermining demand recovery.

Traders should closely watch OPEC+ policy shifts, U.S.-Iran nuclear developments, and U.S.-China trade headlines for any signs of a supply-demand rebalancing. Without a clear bullish catalyst, sellers are likely to stay in control in the coming sessions.

More Information in our Economic Calendar.