Oil prices are set for their steepest weekly decline in nearly a year as concerns over weak demand and plentiful supply persist, overshadowing a decision by OPEC+ to delay a planned production increase.

Brent crude hovered around $73 a barrel on Friday, down almost 8% for the week, while West Texas Intermediate (WTI) crude was near $69. The OPEC+ alliance, which includes members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, announced it would postpone a planned output boost of 180,000 barrels per day in October and November. However, the group's larger plan to increase production by 2.2 million barrels a day over the next year remains unchanged.

The decline in oil prices, which began in early July, is largely attributed to sluggish demand from key consumers like China and signs of increasing supply from non-OPEC producers. Market signals, such as the narrowing of the backwardation structure — where near-term contracts trade at a premium to longer-dated ones — indicate weaker sentiment. While disruptions to Libyan oil supplies have provided some support, they have not been enough to offset the broader downtrend.

Analysts at Citigroup, including Eric Lee, noted that while the OPEC+ decision and geopolitical tensions could support prices in the $70 to $72 range for Brent, they anticipate a potential dip into the $60 range by 2025 if a market surplus develops.

Further signs of weakening demand are evident in the refined products market. Diesel markets in China and India, which together account for much of Asia's oil demand, are slowing, with refining margins under pressure. Similar trends are seen in Europe, where diesel futures recently hit their lowest levels since mid-2023.

In the U.S., government data showed a drop in commercial crude inventories by nearly 7 million barrels last week, reaching the lowest level in about a year. However, this decline has not been sufficient to counter the global concerns over supply and demand balances.

The market remains focused on OPEC+ policy adjustments, geopolitical risks, and economic signals from key consumers as potential indicators for future price direction.