Oil prices fell over 1% in early Thursday trading as markets reacted to two significant developments: continued US-Iran nuclear negotiations that could potentially ease sanctions and lift Iranian oil exports, and reports that OPEC+ is considering increasing production output for July. West Texas Intermediate crude dropped to $60.65 per barrel while Brent crude declined to around $63.45.
1. US-Iran Nuclear Talks Create Supply Uncertainty
The fifth round of Iran-US nuclear talks is scheduled to take place in Rome on Friday, with Oman acting as a mediator between the two sides. According to Iranian Foreign Ministry spokesman Esmaeil Baghaei, Tehran has agreed to a proposal pitched by Oman, though significant obstacles remain.
The Iranian negotiating team remains committed to defending “the rights and interests of the Iranian people, particularly in securing the peaceful use of nuclear energy, including uranium enrichment,” and seeks the lifting of what it terms “unjust sanctions.” However, Tehran’s uranium enrichment program remains the primary sticking point between Iran and the US, with Washington insisting that Tehran fully cease its enrichment activities.
The potential for sanctions relief has significant implications for global oil markets. Iran is currently exporting crude oil at limited volumes due to US sanctions, but could significantly ramp up its exports if restrictions are eased.
This development aligns with production increases already underway in several OPEC+ member states, raising concerns over potential oversupply in global oil markets and putting downward pressure on prices.
Mixed signals surrounding the talks, coupled with reports of a potential Israeli strike on Iran’s nuclear facilities, are adding to market uncertainty and investor caution. The market is pricing in the possibility that successful negotiations could bring substantial Iranian crude back to global markets relatively quickly.
2. OPEC+ Production Increase and Market Dynamics
As of 5:20 AM EDT on May 22, 2025, WTI crude futures were trading at $60.65 per barrel, down $0.92 or 1.49% from the previous settlement price of $61.57. Brent crude fell by a similar margin to $63.94, down $0.97 or 1.49%. The decline extends recent weakness, with WTI down 15.61% year-to-date and 21.20% over the past year.
Adding to supply concerns, Bloomberg News reported that OPEC+ is discussing whether to make another large output increase at their June 1 meeting. An increase of 411,000 barrels per day for July is among the options under discussion, according to delegates, though no final agreement has been reached.
The potential production increase comes as US inventory data showed mixed signals about demand. Commercial crude oil inventories increased by 0.3% during the week ending May 16, rising by around 1.3 million barrels to 443.2 million barrels – higher than market predictions of a 1.8 million barrel decrease. This surprise stock build, along with increases in gasoline inventories of around 800,000 barrels, suggests sluggish demand in the world’s largest oil consumer.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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