Brent crude oil futures tumbled more than 3% on Thursday, slipping below $64 per barrel, as mounting concerns over global oversupply continued to weigh heavily on prices. Sentiment turned increasingly bearish following reports that Iran signaled openness to a potential agreement with the United States in return for sanctions relief.
Brent crude sinks by over 3%
The prospect of a diplomatic breakthrough raised expectations that Iranian oil could soon return to the global market in larger volumes, exacerbating the current oversupply narrative.
Adding to the downward pressure, Saudi Arabia expressed full support for the US-Iran nuclear negotiations, voicing optimism that the talks could lead to a positive resolution. This diplomatic momentum reinforced market fears that a deal would unlock significant Iranian crude exports, potentially swamping an already fragile market struggling to balance demand with rising inventories.
Further compounding supply worries, data from the US Energy Information Administration (EIA) showed an unexpected 3.4 million barrel build in US crude oil inventories last week, sharply above analysts' expectations and following closely on the heels of industry data that reported a hefty 4.3 million barrel increase. The back-to-back inventory builds underscored persistent demand headwinds, particularly in the face of weaker refining activity and softening export demand.
OPEC revised down its forecast for oil supply growth
At the same time, OPEC revised down its forecast for oil supply growth from non-OPEC+ producers, now expecting an increase of 800,000 barrels per day in 2025, down from its previous estimate of 900,000 barrels per day. The adjustment reflects the challenges facing US shale producers and other non-OPEC nations as they contend with capital discipline, cost inflation, and environmental pressures. Nonetheless, the group's plans to proceed with its scheduled output increases, aimed at reclaiming lost market share, continued to add to the downward momentum in oil prices.
Amid this backdrop, traders are growing increasingly cautious, with concerns mounting that the combination of rising inventories, potential Iranian oil inflows, and OPEC's supply strategy could keep the market oversupplied well into the second half of the year, especially if global demand fails to accelerate meaningfully.
