Oil prices stumbled into the weekend, shedding over 1% on Friday and marking their steepest weekly decline since late March. Traders were on edge ahead of a pivotal OPEC+ summit on Saturday, where the players decided to crank up the taps once again. The group greenlit a production hike of 411,000 barrels per day (bpd) for June, its second consecutive month of expansion, despite falling prices and mounting concerns over weak demand.

By Friday’s close, West Texas Intermediate (WTI) crude slipped by $0.95 landing at $58.29 per barrel, while Brent crude dropped $0.84, settling at $61.29. For the week, Brent nosedived by over 8%, with WTI trailing close behind at a 7.7% loss.

Behind the scenes, Saudi Arabia (the unofficial captain of the OPEC+ ship) reportedly informed allies it had no appetite for more supply cuts to artificially prop up the market. That is notable, given that the group is already throttling back output by more than 5 million bpd.

In the backdrop, hopes of a melt in U.S.-China trade tensions emerged, with Beijing considering a proposal from Washington to resume dialogue over tariffs imposed by the Trump’s administration. While not directly oil-related, any sign of compromise between the world’s two largest economies tends to lift market sentiments, and by extension, crude demand outlooks.

On the supply side, Baker Hughes’ weekly rig count revealed a minor drop in oilfield activity. The total number of U.S. rigs fell by 3 to 584, down 21 from a year ago. Oil rigs led the decline, falling by 4 to 479, while gas rigs inched up by 2. In the Permian Basin, the crown jewel of American shale, rigs dropped to 287, marking the lowest count since December 2021.

When markets reopened on Monday, the tone had turned more bearish. WTI futures sank over 2% to around $56.90 per barrel, and Brent followed suit, falling to the $60 mark. Traders fretted over a potential oversupply, as OPEC+’s output hike could reintroduce up to 2.2 million bpd by November. Unofficial reports suggest that Saudi Arabia was turning up the heat on quota-busting members with a production policy that doubles as both market strategy and disciplinary action.

Amid these shifts, geopolitical tensions in the Middle East added further complexity. A Houthi missile reportedly landed near Tel Aviv’s airport, prompting Israeli Prime Minister Netanyahu to threaten retaliation against both the Houthis and their Iranian backers. Iran, in turn, warned it would respond decisively to any attacks.

However, crude prices snapped back on Tuesday. WTI surged by 4% to $59.40, and Brent climbed to $62.60, buoyed by bargain hunting and technical indicators suggesting the market was oversold. Additional support came from renewed Chinese demand post-holiday and better-than-expected U.S. economic data.

Supply-side pressure appeared to ease slightly, too. Permian heavyweight Diamondback Energy cut its production outlook, signalling that ultra-low prices were finally starting to bite. Another shale operator followed suit, confirming a pullback in drilling. Meanwhile, Saudi Arabia dialled down its official selling prices, not out of desperation, but as a calculated play to retain market share. Oil extended its gains on Tuesday, with Brent settling at $62.03 and WTI at $59.00, driven by three main forces: improving Chinese demand, a slowdown in U.S. output, and escalating Middle East instability. However, diplomatic winds shifted when the U.S. announced a halt to its aerial campaign against Houthi targets in Yemen, citing a ceasefire agreement aimed at safeguarding maritime trade routes.

By Wednesday morning, crude prices had punched higher again—WTI crept past $60 and Brent floated above $63. That’s a 3% lift from the prior session, supported by encouraging signs of stronger European and Chinese demand. Further boosting prices were fresh announcements from Diamondback and Coterra Energy, both trimming rig counts to protect margins.

In China, holiday consumer spending surged, and European firms were set to defy bearish forecasts with stronger-than-expected earnings. Adding to the optimism, news broke that U.S. and Chinese officials were preparing to meet, reviving hopes that better diplomatic relations could breathe new life into global oil consumption.