Brent is Capped by $69.00

Brent crude oil prices are down 2.6% this week, slipping to $64.00 and showing signs of weakening compared to last week’s temporary rebound from the same level. The decline in momentum is largely driven by renewed optimism surrounding a potential U.S.–Iran nuclear deal, strongly backed by the U.S. administration. If sanctions are lifted and Iran is allowed to resume oil exports, the market could see an additional 1 million barrels per day, significantly altering supply dynamics. A new round of talks is scheduled for May 23 in Rome, which has already pressured prices down to $64.83 as of Wednesday.

Earlier, oil prices had rebounded after the U.S. and China reached a provisional agreement to reduce tariffs to 30% and 105%, respectively, for a 90-day trade truce set to expire in mid-August. This optimism pushed Brent prices back toward $70 per barrel.

However, Iran reiterated its firm stance on continuing its nuclear program, sparking speculation that Israel might be preparing an airstrike on Iranian nuclear facilities. This geopolitical tension caused a brief rally in oil prices, lifting Brent crude to as high as $66.80.

Other factors, such as the recent downgrade of U.S. sovereign credit, rising American oil inventories, and upcoming U.S. May PMI data, seem to carry less weight in the market’s current pricing behavior. The spotlight is firmly on the U.S.–Iran negotiations scheduled for Friday, which may extend through the weekend. This raises the likelihood of a price gap at Monday’s market open.

Large investors have already begun positioning for a retreat. The United States Oil Fund (USO) experienced $163.6 million in net outflows last week, followed by another $55.1 million this week, signaling a cautious or bearish outlook. Following this trend may be prudent. A drop in Brent crude to the $57.00–59.00 range could trigger a technical rebound, while a breakout above the $69.00 resistance would activate an upside scenario toward the $75.00–77.00 target zone.