Oil Prices Decline After "OPEC+" Production Increase Amid Concerns About Demand Drop

SadaNews - Oil prices declined after the "OPEC+" alliance agreed to a larger-than-expected increase in production for next month, raising fears of a potential oversupply, while U.S. tariffs cast doubts about demand prospects.

Brent crude fell by up to 1.6%, approaching $67 per barrel after a 0.7% decline on Friday, while West Texas Intermediate stabilized near $66.

On Saturday, the alliance decided to raise supplies by 548,000 barrels per day, putting "OPEC+" on course to cancel the latest production cut a year ahead of schedule.

Alliance officials pointed to summer demand as one of the reasons for their optimism about the market's ability to absorb additional barrels, a move that coincides with U.S. President Donald Trump's demand for companies to lower fuel costs.

Volatility in Oil Markets

The oil market has been experiencing volatility in recent weeks following the conflict between Israel and Iran, with a fragile ceasefire currently in place, and attention shifting to "OPEC+" supply policies and U.S. trade.

Commerce Secretary Howard Lutnick stated that tariffs designed on a country-by-country basis would take effect on August 1, providing trading partners with some extra time before the previous deadline set for July 9.

"OPEC+" had previously announced increases of 411,000 barrels per day for May, June, and July, which are already three times the previously scheduled pace of increase. Traders anticipated that the increase in August would be similar. However, the new increase reflects a strategic shift from years of production restrictions to pumping supplies again to regain market share.

The alliance stated in a statement released on Saturday that the decision to increase was based on "stable global economic prospects and sound market fundamentals currently." Saudi Arabia followed the decision by raising the prices of its main crude oil to Asia next month, indicating its confidence in the market's ability to absorb additional supplies from "OPEC+."

The alliance may also consider adding another 548,000 barrels per day in September during the next scheduled meeting on August 3, a move that would complete the restoration of 2.2 million barrels per day of supplies that had been halted in 2023, according to representatives.