Oil prices lifted during Asia's Friday trade and were on track for their second straight weekly gain, buoyed by signs of easing tensions between the United States and China.
However, gains were capped by concerns over a potential return of Iranian supply and rising global output forecasts.
As of 3:10 pm AEST (5:10 am GMT), Brent crude rose $0.32, or 0.5%, to US$64.85 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained $0.35, or 0.6%, to trade at US$61.97.
Both benchmarks had fallen more than 2% in the previous session amid concerns about a possible Iranian nuclear agreement that could reintroduce Iranian barrels to the market.
"The easing geopolitical risks weighed on sentiment already burdened by fears of rising supply from fellow OPEC members," ANZ analysts said. "After agreeing to accelerate the phase-out of the 2.2 million barrels per day in voluntary cuts in May and June, there are growing expectations that the group will extend the 411,000 barrels per day monthly supply increase into July.
"This equates to more than half of the voluntary cuts being phased out within three months, instead of the originally scheduled 18-month plan."
Nevertheless, Brent and WTI were up about 1% on the week, reflecting earlier strength driven by improving sentiment.
The rally was underpinned by news that Washington and Beijing, the world's two largest oil consumers, had agreed to a 90-day truce in their trade dispute, including mutual tariff reductions. The move temporarily eased fears of further global economic deterioration.
Meanwhile, in its latest Oil Market Report for May, the IEA forecast demand growth of just 650,000 bpd for the remainder of 2025, with the agency citing mounting economic headwinds and record electric vehicle (EV) sales as key factors weighing on oil consumption.
Additional downward pressure came from data released earlier in the week by the U.S. Energy Information Administration (EIA), which showed a larger-than-expected increase in crude inventories - raising concerns about weakening demand in the United States, the world's largest oil consumer.
