Crude slid for a second week after a surge in US output and inventories risked making up for the loss of output from the political crisis-stricken Venezuela and a beleaguered Iran, where a complete embargo on oil exports is now under force as waivers on imports from Tehran have been lifted.
Iran's oil exports could plunge to 300,000 to 400,000 barrels a day in the coming months, people familiar with the matter said in a Wall Street Journal report.
That level of output compares with a production of 2.5 million daily barrels in May 2018, a month in which President Donald Trump disclosed a plan to pull the US out of the Iran nuclear accord that revived the country's exports after several years of hiatus.
Iran, the third-biggest oil producer in Organization for Petroleum Exporting Countries (OPEC), stood defiant in the face of tightened US sanctions, which were imposed partially in November, when seven countries, including India, Japan, and Turkey, were granted waivers on their oil imports.
"Bringing Iran's oil exports to zero is a wish of the Americans, but it is an illusion," Iranian Oil Minister Bijan Zanganeh was cited as saying in the Journal Wednesday.
In Venezuela, "the White House will likely look to further erode the country's oil export revenue by compelling consuming countries like India to curb their Venezuelan purchases," RBC Capital Markets was cited as saying in a note on OILPRICE.com.
RBC's comments came after the US-backed opposition leader Juan Guaido was unsuccessful in his latest attempt to uproot President Nicolas Maduro, as the army in the country was said to have developed cold feet.
Oil prices were also under pressure this week on speculation that a joint production cut of 1.2 million barrels per day implemented by OPEC and non-OPEC producers led by Russia may not be extended beyond June when the cartel comes together in Vienna, Austria, for a review of its market stabilization policy.
West Texas Intermediate futures sank by almost 4% on Thursday, extending their declines from Wednesday, after the Energy Information Administration (EIA) said crude inventories soared by 9.9 million barrels over a week to April 26, versus a 1.4 million-barrel increase by analysts in an S&P Global Platts survey.
The build came at a time when refineries were preparing to enter a period of maintenance before the US driving season begins in the summer, according to a report from MarketWatch. Furthermore, data show a 10 million-barrel weekly jump in US production, the most so far this year, undermining the OPEC's attempt to stabilize the market.
Meanwhile, the number of oil rigs operating in the US rose by two to 807, according to data from energy services firm Baker Hughes ( BHGE ), which tracked the seven-day period ending May 3. The combined oil and gas rig count in the US fell by one to 990 as gas rigs slid by three to 183.
In Canada, the number of oil rigs in operation were down by two to 17 during the same period, while the number of gas rigs was flat at 44. As a result, the North American total fell by three to 1,051 versus 1,118 a year ago, the data showed.
On Friday, West Texas Intermediate and Brent futures recovered to $70.80 and $61.93, respectively, following the slump on Thursday.