Oil Rallies as Markets Balance Demand, Supply Equation
Oil prices edged higher on Friday as investors balanced signs of progress in US-Iran peace efforts against expectations that OPEC+ will approve another production increase this weekend.
This expectation and easing geopolitical pressure in the Middle East stoke fresh uncertainties between demand and supply outlook in the global commodity markets.
The OPEC+ ministerial group is scheduled to hold a virtual meeting this weekend on Sunday, July 5, 2026, to review global market conditions and decide on August production quotas.
For the August production targets, the market widely expects the alliance to weigh another similar production hike as they continue normalising supply, though analysts note that Middle East security dynamics and Strait of Hormuz developments will be a major focus
Brent crude traded at $72.21 per barrel, up around 0.6% from the previous close of $71.80. US benchmark West Texas Intermediate (WTI) rose about 0.3% to $68.98 per barrel from $68.69 in the previous session.
Trading activity was expected to remain subdued, with US financial markets closed for the Independence Day holiday.
Prices found modest support as investors assessed signs of progress in diplomatic efforts between Washington and Tehran, easing fears of significant disruptions to Middle East oil supplies.
US President Donald Trump said Thursday that negotiations with Iran were advancing and suggested the two sides were close to reaching an agreement. “We’re negotiating …I think they’ve agreed to just about everything we need,” Trump said in an interview with CNBC.
Trump reiterated that the US is not seeking regime change in Iran, saying Washington’s objective remains preventing Tehran from acquiring a nuclear weapon.
“We’re not looking for regime change. I’m looking for something very simple: they cannot have a nuclear weapon,” he said. Trump also defended recent US military action against Iran, saying the country had been “totally defeated militarily.”
“I’ve defeated them militarily. They’re totally defeated militarily. They have some missiles left, we could wipe them out too, and I hit them three times last week very hard, because they sent a drone into a ship,” he said.
Qatari and Pakistani mediators said Thursday that the next round of US-Iran talks would be held “at the earliest possible time,” after the funeral ceremonies for Iran’s late Supreme Leader Ayatollah Ali Khamenei, who was killed in US-Israeli strikes on Feb. 28, with funeral ceremonies scheduled to run from July 4 through July 9.
Investors are now focused on Sunday’s OPEC+ meeting, where the producer group is widely expected to approve another 188,000 barrels per day of production increase for August. Analysts said the market remains wary as geopolitical tensions in the Middle East continue despite diplomatic efforts.
At the same time, the gradual recovery of oil flows through the Strait of Hormuz and increased production from Gulf producers have helped ease supply concerns, keeping a lid on further price gains.
