Oil prices edged lower on Friday, contributing to a weekly decline of more than 3%, as concerns over supply disruptions from the Israel-Hezbollah conflict eased and expectations of increased supply in 2025 weighed on the market, despite OPEC’s anticipated extension of output cuts.
Brent crude fell by 34 cents, or 0.46%, to settle at $72.94 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped 72 cents, or 1.05%, closing at $68. Trading volumes were muted due to the U.S. Thanksgiving holiday.
For the week, Brent lost 3.1%, and WTI saw a more significant drop of 4.8%.
While tensions between Israel and Hezbollah persisted, with Israeli tanks entering a Lebanese border village on Friday, the ceasefire enacted earlier in the week has reduced the oil market’s risk premium. The lack of significant disruption to oil supply from the ongoing Middle East conflict has helped further ease price pressures.
Beyond geopolitical concerns, the outlook for 2025 remains bearish for oil prices, as increased global supply is expected. The International Energy Agency (IEA) has forecasted more than 1 million barrels per day of excess supply, representing over 1% of global production.
Tamas Varga of oil broker PVM stated, “Next year promises to be looser than the current one, with oil prices expected to average below the 2024 level.”
Meanwhile, OPEC, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, has postponed its next policy meeting to Dec. 5, from its original date of Dec. 1. The group is expected to decide whether to extend its production cuts further, but concerns remain about the possibility of further price weakness in the face of rising non-OPEC output.
Saxo Bank analyst Ole Hansen added, “Expectations for robust production from non-OPEC producers next year could lead to a crude surplus.”
A Reuters poll of 41 analysts predicted that Brent could average $74.53 per barrel in 2025, marking the seventh consecutive monthly downward revision of the price forecast.