Oil prices continue to decline after US tariffs and OPEC+ production increases
8 July 08:27
Oil prices declined on Tuesday after rising by almost 2% during the previous trading session, as investors assessed new data on US tariffs and a higher-than-expected increase in OPEC production for August. This was reported by "Komersant Ukrainian" with reference to Reuters.
According to OilPrice.com, Brent crude oil futures fell 39 cents, or 0.56%, to $69.19 per barrel as of 08:16 Kyiv time. US West Texas Intermediate fell 41 cents, or 0.41%, to $67.52 per barrel.
Trump’s tariff policy causes uncertainty in the market
On Monday, US President Donald Trump began notifying trading partners that significantly higher US tariffs would take effect on August 1. However, he later said that this date was not 100% final.
This includes major suppliers such as South Korea and Japan, as well as smaller US exporters such as Serbia, Thailand, and Tunisia.
Trump’s tariffs have caused uncertainty across the market and fears that they could negatively impact the global economy and, consequently, oil demand.
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Demand remains strong despite uncertainty
Despite this, there are some signs that current demand remains strong, especially in the US, the world’s largest oil consumer, which is supporting prices.
A record 72.2 million Americans planned to travel more than 50 miles (80 km) over the July 4 weekend, according to data released last week by travel group AAA.
Investors showed optimism ahead of the holiday period, as evidenced by data from the U.S. Commodity Futures Trading Commission released on Monday. It showed that fund managers increased their net long positions in oil futures and options in the week to July 1.
“Immediate demand remains healthy due to seasonal factors. The question is whether future demand will remain strong enough to absorb the larger-than-expected OPEC supply,”
– said Emril Jamil, senior analyst at LSEG Oil Research.
Additional signs of stronger demand were recorded in India, the world’s third largest oil consumer. Government data showed that fuel consumption in June was 1.9% higher compared to the same month last year.
OPEC significantly increases production
OPEC announced a significant increase in oil production in August, which caused prices to fall. On Saturday, the organization agreed to increase production by 548,000 barrels per day in August, which is higher than the 411,000 barrels per day increase they had made in the previous three months.
This decision almost completely reverses the voluntary cuts of 2.2 million bpd that the group had previously implemented. The September increase will complete the return of 2.17 million bpd to the market – according to five sources with knowledge of the matter, the group plans to approve an increase of about 550,000 bpd in September during its August 3 meeting, which will completely reverse all cuts.
Actual production increase less than announced
However, analysts point out that the actual increase in production was less than the announced levels, with most of the supply coming from Saudi Arabia.
This situation creates a complex picture for the oil market, where geopolitical factors, trade policy and OPEC decisions continue to shape energy prices amid global economic uncertainty.
However, the current trend is clear: oil is getting cheaper. This means that Russia will feel a little pain.
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