Oil Market Sees Weekly Drop in Prices as Supply Risks Ease

Global crude prices retreated during the week as easing geopolitical tensions reduced risk premiums and shifted market focus toward improving supply expectations.

Brent crude closed at $67.40 per barrel, down three point three per cent from last Friday’s $69.73, while US benchmark West Texas Intermediate (WTI) fell three point five per cent to $63.15 compared with $65.46 a week earlier.

The main driver of downward pressure was renewed diplomatic engagement between Washington and Tehran. Reports of indirect talks in Oman over Iran’s nuclear program signalled that 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.

However, supply disruptions, sanctions-driven trade shifts, and persistent regional risks prevented a deeper decline.

Conversely, signals from OPEC+ reinforced expectations of steady supply normalization. Several members reiterated commitments to gradually restore output depending on market conditions, strengthening concerns about a more balanced – or potentially looser – global supply outlook. Trade developments also contributed to the softer tone, with tariff adjustments among major oil-consuming economies redirecting crude purchases toward alternative suppliers, among others.

The weekly decline, however, remained limited as several supply-side risks provided offsetting support. Severe winter weather across large parts of the US disrupted production, refining activity, and export operations, temporarily removing significant volumes of crude supply from the market. The outages were reflected in sizeable inventory draws, reinforcing expectations of tighter near-term balances 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 uncertainty surrounding the outcome of US-Iran negotiations keep the possibility of regional supply disruptions in focus. 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 added another layer of uncertainty. Washington’s tightening of measures targeting oil flows to Cuba, including tariffs on countries supplying crude to the island, disrupted regional trade routes. The halt of Venezuelan shipments to Cuba following political upheaval further complicated regional energy logistics, highlighting the broader ripple effects of sanctions on crude flows.

Analysts say the week’s price action reflects a recalibration of risk premiums, with easing geopolitical tensions weighing on crude benchmarks. However, supply-side uncertainties, weather-related disruptions, and sanctions-driven trade shifts continue to provide support, ensuring that oil markets remain delicately balanced heading into the coming weeks.