Oil prices extended their decline in Asian trading on Thursday after data showed an unexpected build in U.S. crude inventories, while uncertainty over the resumption of nuclear talks between the United States and Iran next week further heightened market concerns about oversupply.

In the previous trading day, oil prices closed lower and the trend was volatile. Initially, oil prices rose by more than 1.5% due to a CNN report that Israel might strike Iran's nuclear facilities.

Brent crude futures expiring in July fell 0.5% to $64.61 a barrel as of 20:48 ET, while West Texas Intermediate (WTI) futures fell 0.4% to $61.30 a barrel.

The fifth round of nuclear talks between Iran and the United States is scheduled to take place in Rome on Friday, May 23, with Oman continuing to play the role of mediator.

At the heart of the dispute remains Iran's uranium enrichment activities. The United States has called for a complete halt to enrichment, while Iran insists on its right to enrich uranium for peaceful purposes.

Iran could increase its crude exports if the talks make progress or lead to an easing of U.S. sanctions. Currently, Iran's oil exports are at reduced levels due to sanctions, but as the third-largest producer among OPEC members, Iran has significant production capacity.

This comes at a time when members of the OPEC+ cartel have already started increasing production this month, further highlighting the supply glut.

Oil prices had risen sharply in early trading on Wednesday after CNN reported that Israel was preparing for a potential military strike on Iran's nuclear facilities.

The report said Israeli leaders had not yet made a final decision, but the likelihood of an Israeli strike had "increased significantly" in recent months.

An unexpected build in U.S. crude inventories in the week ended May 16, 2025, raised concerns about oversupply and sent oil prices lower.

The U.S. Energy Information Administration (EIA) reported that crude oil inventories rose by 1.3 million barrels, bringing total inventories to 443.2 million barrels. The increase was contrary to analysts' expectations for a decrease of 1.3 million barrels.

In addition, gasoline and distillate inventories increased by 816,000 barrels and 580,000 barrels, respectively, while demand indicators weakened.

A day earlier, the American Petroleum Institute (API) also reported a surprise increase of 2.5 million barrels in U.S. crude inventories.

While the summer driving season that begins after Memorial Day in the U.S. could boost demand and help draw down inventories, recent forecasts and data show supply outstripping demand.