Oil Prices Decline Amid Nuclear Talks and OPEC+ Output Expectations

Oil futures fell on Friday as market participants reacted to ongoing geopolitical developments and expectations for increased production by major oil producers. Brent crude futures were down 22 cents, or 0.32%, to $68.58 a barrel by 0445 GMT, while U.S. West Texas Intermediate crude fell 12 cents, or 0.18%, to $66.88. The trading volume was lower due to the U.S. Independence Day holiday, further contributing to the subdued price action.

Iran-U.S. Nuclear Talks Ease Tensions

Oil prices initially saw pressure from reports that the U.S. is planning to meet with Iran next week to restart nuclear talks. According to Axios, these talks aim to resume discussions regarding Iran’s nuclear program, a key factor affecting global oil markets. This comes after Iranian Foreign Minister Abbas Araqchi reaffirmed Tehran’s commitment to the nuclear Non-Proliferation Treaty, a positive signal that has eased some fears of escalating tensions in the region.

Vandana Hari, founder of Vanda Insights, noted that Araqchi’s comments helped mitigate the risk of further hostilities. “Thursday’s news that the U.S. is preparing to resume nuclear talks with Iran, and Araqchi’s clarification that cooperation with the U.N. atomic agency has not been halted considerably eases the threat of a fresh outbreak of hostilities,” Hari said.

The comments came just a day after Iran enacted a law suspending cooperation with the U.N. nuclear watchdog, the International Atomic Energy Agency (IAEA). While there was some immediate price correction following these developments, the market is likely to wait until Monday, when the U.S. reopens and takes in the results of OPEC+’s decision on production increases.

OPEC+ Set to Raise Output

OPEC+, the world’s largest group of oil producers, is expected to announce an increase of 411,000 barrels per day (bpd) in production for August. This move is part of the cartel’s efforts to regain market share. Reuters reported that four delegates from OPEC+ confirmed the planned production increase. The additional output could weigh on oil prices in the short term, as it signals the producers’ intention to maintain higher levels of supply in response to ongoing demand concerns.

Vandana Hari pointed out that while the current market dynamics are influenced by geopolitical concerns, the OPEC+ meeting scheduled for the weekend remains crucial. “The price correction may have to wait till Monday, when the U.S. reopens from a long weekend and takes in Sunday’s OPEC+ decision,” she added.

U.S. Tariff Policy Uncertainty and the Upcoming Deadline

Alongside concerns over OPEC+ production hikes, another factor weighing on oil prices is the growing uncertainty surrounding U.S. tariff policies. With the end of the 90-day pause on higher tariffs approaching, President Donald Trump announced that the U.S. would begin sending letters to countries on Friday, outlining the tariff rates they will face on goods sent to the U.S. This shift from individual trade deals to blanket tariffs of 20% to 30% has contributed to renewed concerns over global trade tensions.

Trump’s 90-day pause on tariff hikes, which ends on July 9, has already put pressure on large trading partners like the European Union and Japan, who have yet to finalize trade deals with the U.S. The imposition of tariffs could further hurt global economic growth and reduce oil demand, impacting prices negatively.

Sanctions Against Iran and Regional Tensions

In addition to the trade and tariff concerns, the U.S. Treasury Department imposed sanctions on Thursday against a network smuggling Iranian oil disguised as Iraqi oil and on a Hezbollah-controlled financial institution. These sanctions underscore the ongoing geopolitical risks surrounding Iranian oil exports, which remain a critical concern for global oil markets.

On a related note, Saudi Arabian Defense Minister Prince Khalid bin Salman met with President Trump and other officials at the White House to discuss de-escalation efforts with Iran. These diplomatic discussions aim to prevent further conflicts in the Middle East, which could affect oil supply routes and prices.

Barclays Raises Brent Oil Price Forecast for 2025-2026

In terms of longer-term forecasts, Barclays raised its Brent oil price outlook for 2025 by $6 to $72 per barrel and for 2026 by $10 to $70 per barrel. This revision comes amid an improved outlook for demand, indicating that despite the current uncertainty, there are still positive expectations for the oil market in the coming years.

Market Outlook

As traders continue to weigh the balance between geopolitical tensions, OPEC+ output decisions, and global trade policy uncertainty, oil prices are likely to remain volatile. While the immediate pressure from Iranian nuclear talks and the U.S. tariff deadline may dampen prices, the long-term outlook remains supported by strong demand projections and supply adjustments. The key for traders will be to monitor upcoming data, including OPEC+ decisions and the direction of global trade negotiations, to assess how these factors will ultimately shape the oil market.