Oil prices fell due to an unexpected increase in OPEC+ production
7 July 08:34
Oil prices declined on Monday after OPEC surprised markets by increasing production in August by more than expected. At the same time, uncertainty over US tariffs weighed on demand expectations, "Komersant Ukrainian" reports citing Reuters.
Futures for Brent crude oil fell 47 cents, or 0.69%, to $67.83 per barrel as of 05:27 Kyiv time. Meanwhile, US West Texas Intermediate was trading at $66.05, down $0.95, or 1.42%.
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OPEC’s decision to increase production
On Saturday, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC, agreed to raise production by 548,000 barrels per day in August. The decision came as a surprise to markets, as the increase was larger than expected.
“The increase in production clearly represents more aggressive competition for market share and some tolerance for the resulting price and revenue declines,”
– tim Evans of Evans Energy said in a research note.
The August increase represents a jump from the 411,000 bpd monthly increases OPEC approved for May, June and July, as well as the 138,000 bpd in April. According to analysts at RBC Capital, this decision will return to the market almost 80% of the 2.2 million barrels per day of voluntary cuts from the eight OPEC producers.
However, the analysts also added that the actual increase in production has so far been less than planned, with most of the supply coming from Saudi Arabia. Demonstrating confidence in oil demand, Saudi Arabia on Sunday raised the August price of its flagship Arab Light crude to a four-month high for the Asian market. Goldman analysts expect OPEC to announce a final increase of 550,000 barrels per day for September at its next meeting on August 3.
US tariffs and their impact
Oil also came under pressure as U.S. officials signaled a delay in tariffs, but did not provide details on the changes. US President Donald Trump said on Sunday that the United States is close to finalizing several trade deals in the coming days and will notify other countries of higher tariff rates by July 9, with the higher rates scheduled to take effect on August 1.
Trump in April announced a base tariff rate of 10% on most countries and higher “reciprocal” rates of 50% or more, with an initial deadline of this Wednesday. However, Trump also said that the levies could range from “maybe 60% or 70% tariffs to 10% and 20%,” further clouding the picture.
“Concerns about Trump’s tariffs continue to be a broad theme in the second half of 2025, with dollar weakness the only support for oil at the moment,”
– said Priyanka Sachdeva, Senior Market Analyst at Phillip Nova.
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