Oil on track for weekly loss amid potential output hike and US-Iran nuclear talks

Pound, gold and oil prices in focus: commodity and currency check, 23 May

Fri, May 23, 2025, 3:32 AM 4 min read

Oil (BZ=F, CL=F)

Oil prices fell on Friday morning, putting them on track for a weekly loss, as investors eyed the prospect of an increase in supply and US-Iran nuclear deal talks, which are reportedly set to resume on Friday.

Brent crude futures (BZ=F) were down 0.5% to $64.11 a barrel, at the time of writing, while West Texas Intermediate futures (CL=F) declined 0.6% at $60.85 a barrel.

The fall in oil prices came after Bloomberg reported on Thursday that members of the Organization of the Petroleum Exporting Countries and their allies – known as OPEC+ – were discussing making a third consecutive increase in output, with a decision set to be made at the group's meeting on 1 June.

"Traders are bracing for a potential supply wave from OPEC+ producing nations and although a final agreement has yet to be reached, the group is said to be mulling over another 411,000 barrel per day increase in output for July," said Derren Nathan, head of equity research at Hargreaves Lansdown.

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A spokesperson for OPEC had not responded to Yahoo Finance UK's request for comment at the time of writing.

Meanwhile, the US and Iran are set to resume talks in Rome on Friday, according to a number of reports, to discuss the future of Tehran's nuclear programme. Washington is aiming to limit Tehran's nuclear programme, with US president Donald Trump having revived sanctions on Iran to restrict its crude oil exports.

An agreement between the two countries could could pave the way for more barrels being released. The prospect of an increase in supply into the oil market comes amid lingering concerns about demand. Trump's trade war has prompted fears of a global economic slowdown, with concerns that this could weigh on demand for fuel.

Gold (GC=F)

Gold prices rose on Friday, as concerns about mounting US debt rattled investors, driving them to the precious metal which is considered a safe-haven investment.

Gold futures (GC=F) were up 1% at $3,329.70 per ounce at the time of writing, while the spot gold price climbed nearly 1% to $3,326.52 per ounce.

The US House of Representatives narrowly passed Trump's massive tax-cut and spending bill on Thursday, with it now moving onto the Senate, which will be able to make changes or approve the legislation.

There are concerns that the tax cuts and spending proposed in the bill will add to the US debt pile. The Congressional Budget Office said in analysis on Tuesday that the proposals could add $3.8tn to the US federal deficit over the next decade.

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In addition, an auction of 20-year US government bonds, known as treasuries, saw weak demand on Wednesday, signalling investor unease about growing US debt. These concerns about mounting US debt levels prompted a sell-off in bonds this week.

Richard Hunter, head of markets at Interactive Investor, said: "The sell-off in bonds pushes prices lower and therefore yields rise, which has implications for borrowing in general. Indeed, payments on debt can therefore increase significantly, which would add to the burden on an already bloated US budget deficit."

"Earlier in the week, there were bond auctions in both the US and Japan, both of which revealed a lack of demand with investors clearly requiring a higher payback to fund multi-decade borrowing for these governments," he said. "In addition, the recent downgrades to the US credit rating has renewed a 'Sell America' narrative which is growing louder."

"This has also prompted a renewal of haven investments, with gold resuming its ascent to propel it 26% so far this year," Hunter added.

Pound (GBPUSD=X, GBPEUR=X)

The pound rose 0.5% against the dollar (GBPUSD=X) on Friday morning, trading at $1.3487, helped by weakness in the greenback.

The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was down 0.5% to 99.47 at the time of writing.

In terms of data releases, UK retail sales were estimated to have grown by 1.2% in April 2025, according to the Office for National Statistics.

"The retail sector has more spring in its step [with] the latest data ... smashing expectations," said Hargreaves Lansdown's Nathan.

"However, this growth was led by food stores, which retailers put down to the unseasonally sunny skies," he said. "It was not such a bright picture for non-food and clothing stores which saw volumes fall by 0.7%. With rain expected over the bank holiday, retailers will not be able to rely on fair weather shoppers to keep the tills ringing."

In other currency moves, the pound little changed against the euro (GBPEUR=X), trading at €1.1893 at the time of writing. As for broader market movements, the FTSE 100 (^FTSE) rose 0.4% to 8,777 points.

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