Oil Set for Weekly Loss as De-Escalation Hopes and Rising U.S. Inventories Weigh on Prices

Oil prices edged lower in Asian trading on Friday and were on track to post a weekly decline, as easing geopolitical tensions in the Middle East reduced the risk premium that had supported markets in recent sessions.

As of 20:46 ET (00:46 GMT), Brent crude futures for May delivery slipped 0.5% to $107.50 per barrel, while U.S. West Texas Intermediate (WTI) crude declined 0.7% to $93.82 per barrel. Both benchmarks were set to record losses of more than 4% for the week, reflecting a shift in market sentiment.

The pullback comes as investors reassess the likelihood of supply disruptions following signs of potential de-escalation between the United States and Iran. U.S. President Donald Trump announced a 10-day pause on attacks targeting Iran’s energy infrastructure, reportedly at Tehran’s request.

Trump also indicated that negotiations with Iran were progressing positively, raising hopes of a diplomatic breakthrough. However, Iranian officials have adopted a more cautious tone, highlighting ongoing uncertainties around the talks.

Further contributing to optimism, reports suggest that Iran is reviewing a 15-point U.S. proposal aimed at curbing its nuclear and military activities in exchange for sanctions relief and reduced tensions. These developments have eased immediate concerns over potential disruptions to global oil supply, particularly through the Strait of Hormuz—a key artery for global crude shipments.

Oil markets have experienced significant volatility in recent weeks, with prices surging amid escalating tensions involving the United States, Israel, and Iran. However, repeated signals of de-escalation have triggered sharp pullbacks, as traders recalibrate expectations around the scale and duration of potential supply shocks.

Earlier in the week, crude prices dropped notably after the announcement of delayed U.S. strikes, reinforcing the sensitivity of markets to geopolitical headlines.

In addition to geopolitical factors, bearish signals from the United States have added further pressure on prices. Data from the American Petroleum Institute showed that crude inventories increased by approximately 2.3 million barrels last week.

Official figures from the Energy Information Administration revealed a larger-than-expected build of 6.9 million barrels, bringing total inventories to around 456.2 million barrels—the highest level since June 2024.

The combination of easing geopolitical risks and rising inventories points to a more balanced—or even looser—supply outlook, reducing upward pressure on prices.

Overall, oil markets remain highly sensitive to both geopolitical developments and fundamental supply data, with investors closely monitoring diplomatic progress and inventory trends for clearer direction in the near term.