Crude Volatility: Global Benchmarks Stabilize Amid Geopolitical Uncertainty and Interest Rate Concerns

Oil prices showed signs of stabilization during Friday's trading session, with Brent crude futures hovering around $81.30 per barrel and West Texas Intermediate (WTI) trading near $76.80. This follows a week of bearish sentiment sparked by the release of the U.S. Federal Reserve’s May meeting minutes, which suggested that interest rates may remain at restrictive levels for a longer period than previously anticipated. The prospect of 'higher for longer' rates has traditionally suppressed demand expectations in the world's largest oil consumer. However, the downside has been limited by ongoing geopolitical tensions and the looming OPEC+ meeting scheduled for June 2. Analysts are closely watching whether the producer alliance will extend voluntary production cuts of 2.2 million barrels per day into the second half of the year. In the Middle East, the sudden death of Iranian President Ebrahim Raisi has introduced a layer of domestic political uncertainty in Tehran, though energy output from the Islamic Republic remains stable for now. Iranian oil exports have recently hit a five-year high, averaging 1.5 million barrels per day, largely destined for Chinese independent refiners. The U.S. Treasury Department continues to monitor these flows, but large-scale enforcement remains complicated by global supply concerns. In the physical market, the prompt-month spread for Brent has narrowed, indicating a slightly less tight market than in previous weeks. Investors are also monitoring the start of the U.S. summer driving season, which typically boosts gasoline demand. Currently, U.S. commercial crude inventories remain approximately 3% below the five-year average for this time of year, providing a structural floor for prices. Market participants expect crude to remain range-bound between $78 and $84 until a clear signal emerges from the upcoming OPEC+ ministerial meeting.