U.S. oil prices advanced slightly Thursday, trading above $68 per barrel after hitting two-month highs on Wednesday. Traders appear to be weighing the U.S.-China trade deal with rising tensions between U.S. and Iran, which could cause supply disruptions.
West Texas Intermediate crude was just above $68 a barrel on Thursday after shaking off an early decline, as traders monitor the Middle East and the latest U.S. trade policy developments. Brent crude, the international benchmark, traded at about $69.70 on Thursday. Both benchmarks surged on Wednesday after the U.S. ordered nonessential personnel out of parts of the Middle East amid security concerns ahead of Iran nuclear deal talks scheduled for this weekend in Oman.
President Donald Trump told the "Pod Force One" podcast on Monday that he has become "less confident" of reaching a deal and shutting down Iran's nuclear weapons program.
The State Department on Wednesday ordered the departure of all nonessential personnel from the U.S. Embassy in Baghdad and authorized the departure of nonessential personnel and family members from Bahrain and Kuwait. Meanwhile, Defense Secretary Pete Hegseth authorized the voluntary departure of military dependents from across the Middle East, the Wall Street Journal reported.
Oil prices have found support, despite a bearish supply-demand picture, after the U.S. and China on Tuesday agreed to the framework for a trade deal, boosting optimism for energy demand from the world's two largest oil consumers. However, concerns over the Russia-Ukraine war and the possibility for new sanctions from the U.S. and European Union is also a consideration for oil traders.
U.S. Oil Production
Meanwhile, the Energy Information Administration (EIA) revised lower its U.S. crude oil production estimates this week. In its latest Short-Term Energy Outlook, released Tuesday, the EIA said output would decline by 50,000 barrels in 2026 to 13.37 million barrels per day. This would be the first decline on an annual basis in U.S. output since 2021. The EIA left output growth for 2025 unchanged at 210,000 barrels per day.
"The decline isn't too surprising, given the recent slowdown in drilling activity. The low-price environment has seen the rig count fall by 33 over the last six weeks to 442, the lowest since October 2021. Given our view that oil prices will be lower towards the end of this year, there's scope for further downward revisions in U.S. crude oil output estimates for next year," ING analyst Warren Patterson wrote Wednesday.
This outlook comes as Trump has repeatedly pledged to convince producers to drill for more oil.
OPEC+ Raises Production Output
Earlier this month, the Saudi Arabia-led Organization of Petroleum Exporting Countries and its allies, including Russia, announced it would raise oil output in July by the same amount as in the previous two months.
The oil cartel, OPEC+, agreed to add 411,000 barrels a day of supply. This means that, by the end of July, OPEC+ will have brought back more than 60% of its planned supply increase of 2.2 million barrel per day, according to a June 2 note from ING.
ING analysts noted in early June that some U.S. senators are "pushing for harder" sanctions against Russia to keep the country's oil off the global market, and cut the revenue that Russia uses to fund its military.
The European Commission announced Tuesday its latest sanctions proposal, which would lower the oil price cap from $60 to $45 per barrel and ban the use of the Nord Stream pipelines to funnel gas between Russia and Germany. Sanctions leading to lower oil sales from Russia would effectively reduce global supply, helping to force oil prices higher.
On the U.S. side, proposals include 500% tariffs on imports from countries that purchase Russian oil.
Oil Prices And The Stock Market
Among the largest oil and gas names, stocks like Chevron and Exxon Mobil are not offering much for investors to go on.
Exxon Mobil and Chevron stock both edged up marginally during Thursday's stock market action.
The U.S. supermajors are both trading nearly flat in the 2025 stock market. The two companies are expected to post sales and earnings declines through the rest of this year.
U.S. producers Occidental Petroleum and Diamondback Energy were mixed Thursday.
Oilfield service plays Halliburton and SLB, formerly Schlumberger, fell 0.9% and 0.2%, respectively, on Thursday.
Other explorers showing some healthy recent action and strong outlooks include Expand Energy, Antero Resources and Range Resources. Expand and Range Resources are primarily producers of natural gas.
Drilling and subsea equipment provider TechnipFMC is in a buy zone following a breakout. Offshore support play Tidewater has broken a downtrend.
Natural gas producer Comstock Resources jumped 7% Thursday. It is extended after an early May breakout, and has gained more than 30% in this year's stock market.
Please follow Kit Norton on X @KitNorton for more coverage.
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