Oil prices posted a second weekly decline on Friday, reversing earlier gains, on lingering doubts over talks between the US and China to diffuse trade tensions and ahead of a key Opec meeting next week.
Brent, the benchmark for two thirds of the world's oil, was down 1.35 per cent to close at $61.29 a barrel. West Texas Intermediate, the gauge that tracks US crude, fell 1.6 per cent to $58.29 a barrel.
Year-to-date, both benchmarks are down about 17 per cent.
China, which was the hardest hit by US President Donald Trump's sweeping global tariffs, said on Friday it was considering a proposal from Washington to engage in discussions to de-escalate tensions between the world's two biggest economies.
Beijing's position, however, remains "consistent", a Commerce Ministry representative said, indicating it is willing to play hard ball and not cave in to the White House's demands.
Analysts see prices retreating further, with "the dent to global demand that the imposition of US tariffs will impose [having] reinforced our bearish oil price thesis with the trajectory unambiguously to the downside", said Ehsan Khoman, a head of research at MUFG Research.
The market is also keeping an eye on Iran, whose exports the US is trying to squeeze. Mr Trump on Thursday pledged to punish countries that buy oil from Iran, in the process implicitly threatening new sanctions on China.
Iran, Opec's third-largest producer, is also reeling from a port blast this week, directly affecting oil logistics. Any interruption to its crude industry, which provides Tehran with $50 billion to $55 billion in annual revenue, threatens its financial stability.
"Forecasting oil market conditions is challenging under the best of times, but at the current juncture, all estimates come with larger-than-usual uncertainty intervals," Mr Khoman said.
Opec, meanwhile, is expected to accelerate production for a second consecutive month in June, which would provide further support to the oil market. The alliance of oil producers meet on Monday.
Saudi Arabia, the world's biggest oil-exporting country, has reportedly indicated it was willing to accept lower prices for a longer period "to try to enforce some discipline among countries that are producing above target levels", said Edward Bell, chief economist of Dubai-based Emirates NBD Research.
The production boost "is set to loosen [oil markets] in the coming months", said Mr Bell, who expects June will "also see another large boost to output as overproduction has still not stopped and the messaging from Saudi Arabia appears to favour higher output".
Earlier this month, Opec slashed its oil demand forecast for 2025 amid the market uncertainty stemming from the tariffs.
Oil demand growth was revised down to 1.3 million barrels per day, with the "minor adjustment" mainly based on the expected impact of tariffs on the market, the group said. Demand is expected to grow by 40,000 bpd.
For 2026, Opec revised its global demand growth forecast slightly to about 1.3 million bpd.
The International Energy Agency also lowered its forecast for oil demand growth in 2025, revising it down by 300,000 bpd to 730,000 bpd, similarly citing the escalating trade tensions that have negatively affected the economic outlook.
The downgrade comes after robust oil consumption in the first quarter of 2025, which rose by 1.2 million bpd – its strongest rate since 2023, it said.
