Oil prices steady after Israel–Iran ceasefire and OPEC+ supply rumours

Oil prices steadied on Friday after a turbulent week that saw their sharpest weekly decline in nearly two years, as fears of supply disruption from the Israel–Iran conflict eased and traders eyed potential changes in OPEC+ output policy.

Brent crude futures climbed above $68 a barrel in early trade, while US West Texas Intermediate (WTI) crude hovered around $65.80. Despite the modest rebound, both contracts were on track to post weekly losses of roughly 12 per cent, their steepest drop since 2023.

Ceasefire between Israel and Iran cools market fears

The steep sell-off this week was driven by geopolitical developments that removed the war risk premium almost overnight. The crisis escalated over the weekend when the US attacked Iranian nuclear sites, sending prices to a five-month high on Monday. However, markets reversed sharply after US President Donald Trump brokered a ceasefire between Israel and Iran on Tuesday, as per Reuters.

With hostilities pausing, traders and analysts said they could see no material impact on oil flows in the short term, ending immediate fears of a broader regional disruption that had supported prices earlier in the week.

OPEC+ output plans in focus

Prices were also weighed down by a report suggesting the OPEC+ group of producers is considering a supply increase in August. According to the Wall Street Journal, discussions within the alliance point to a potential move to lift output quotas to meet expected summer demand and stabilise markets after recent volatility.

Such a move would mark a cautious shift in policy, with OPEC+ balancing the need to keep prices from overheating with concerns about losing market share to non-member producers.

Rate-cut bets add a floor to prices

Despite the week’s sharp losses, some support for oil came from renewed bets on US interest rate cuts. As per the Wall Street Journal, President Trump is reportedly planning to name a successor to Federal Reserve Chair Jerome Powell earlier than expected. That move, seen as a bid to push for aggressive rate cuts, fuelled expectations that lower borrowing costs could stimulate US economic activity and boost oil demand.

While the Fed has so far kept its benchmark rate at 4.25–4.50 per cent, markets are watching closely for any signal of a policy shift that could revive global growth prospects and energy consumption.

Markets await clarity on supply and demand outlook

With oil benchmarks now back at levels seen before the Israel–Iran conflict began, traders are bracing for further clarity on OPEC+ production plans and the macroeconomic outlook. The abrupt swing from war fears to ceasefire calm, combined with central bank policy uncertainty, underscores the fragile balance in oil markets.

For now, the ceasefire has defused a key geopolitical risk, but the coming weeks could test whether lower prices prompt fresh diplomatic tension within OPEC+ over production strategy or whether demand fears persist amid slowing global growth.

(With inputs from the agencies)