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02-07-2025
VIENNA: Oil prices edged down on Tuesday, weighed by expectations of an OPEC+ output hike in August and concerns of an economic slowdown driven by prospects of higher US tariffs.
Brent crude futures for September delivery fell 16 cents, or 0.24%, to $66.58 a barrel by 0000 GMT US.
West Texas Intermediate crude declined 20 cents, or 0.31%, to $64.91 a barrel.
“The market is now concerned that the OPEC+ alliance will continue with its accelerated rate of output increases,” ANZ senior commodity strategist Daniel Hynes said in a note.
Four OPEC+ sources told Reuters last week that the group plans to raise output by 411,000 barrels per day in August, following similar hikes in May, June, and July.
If approved, this would bring OPEC+’s total supply increase for the year to 1.78 million bpd, equivalent to more than 1.5% of global oil demand. OPEC and its allies including Russia, together known as OPEC+, will meet on July 6.
Uncertainty about US tariffs and their impact on global growth also kept a lid on oil prices.
US Treasury Secretary Scott Bessent warned that countries could be notified of sharply higher tariffs, opens new tab despite good-faith negotiations as a July 9 deadline approaches, when tariff rates are scheduled to revert from a temporary 10% level to President Donald Trump’s suspended rates of 11% to 50% announced on April 2.
Morgan Stanley expects Brent futures to retrace to around $60 by early next year, with the market being well supplied and geopolitical risk abating following the Israel-Iran de-escalation. It expects an oversupply of 1.3 million bpd in 2026.
A 12-day war that started with Israel targeting Iran’s nuclear facilities on June 13 pushed up Brent prices. They surged above $80 a barrel after the US bombed Iran’s nuclear facilities and then slumped to $67 after Trump announced an Iran-Israel ceasefire.
The world’s largest group of oil producers, OPEC+, is set to announce another big increase of 411,000 barrels per day in production for August as it looks to regain market share, four delegates from the group told Reuters.
If the increase is agreed, it would bring the total rise in supply from OPEC+ to 1.78 million bpd so far this year, equivalent to over 1.5% of total global demand. The group has not yet increased production by the volumes agreed because some members are compensating for previous overproduction and others need longer to bring output back online.
The group has made a radical change in policy this year, after several years of output cuts totaling more than 5 million bpd. This came when eight members started to unwind their most recent output cut of 2.2 million bpd starting in April and accelerated the production hikes in May, June and July, despite the extra supply weighing on crude prices.
The change came after some members, such as Kazakhstan, produced way over their targets, angering other members that were sticking more closely to agreed cuts. OPEC and its allies including Russia, together known as OPEC+, are also seeking to win back market share during the period of cuts when rival producers such as the United States boosted production.
Russian President Vladimir Putin said on Friday that OPEC+ projects rising global demand, especially in the summer, suggesting the group may continue with big output hikes.
The group of eight, which includes Saudi Arabia, Russia, Kuwait, Iraq, the United Arab Emirates, Kazakhstan, Oman and Algeria, will meet on July 6. (Int’l News Desk)
