Oil Prices Fall As OPEC+ Surprises Market With Bigger August Output Hike

Oil prices declined on Monday after OPEC+ announced a larger-than-anticipated production increase for August, raising market concerns about a potential oversupply.

Brent crude futures were down by 80 cents, or 1.2 per cent, trading at $67.50 per barrel as of early morning today. Meanwhile, US West Texas Intermediate (WTI) crude slipped by $1.32, or 2 per cent, to $65.68 per barrel, reported Reuters.

The unexpected move from the group of oil producers—comprising the Organisation of the Petroleum Exporting Countries and its allies, collectively known as OPEC+—added fresh pressure to global crude benchmarks. The alliance reached a decision on Saturday to raise production by 548,000 barrels per day (bpd) in August, exceeding previous monthly increases and shaking market expectations.

OPEC+ Signals Aggressive Push for Market Share

Commenting on the development, Tim Evans of Evans Energy remarked, “The increased production clearly represents a more aggressive competition for market share and some tolerance for the resulting decline in price and revenue.” The hike marks a noticeable jump from the 411,000 bpd increments approved for May, June, and July, as well as the 138,000 bpd increase seen in April.

OPEC+ attributed the production hike to steady global economic conditions and strong market fundamentals, pointing to low inventory levels as justification for the move.

Analysts at RBC Capital, led by Helima Croft, noted that this latest decision will return nearly 80 per cent of the 2.2 million bpd in voluntary cuts made by eight OPEC producers back into circulation. However, they also observed that actual output increases have so far trailed projections, with the majority of the supply increase led by Saudi Arabia.

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Saudi Arabia Raises Prices, Further Action Expected

In what appeared to be a display of confidence in future oil demand, Saudi Arabia announced on Sunday that it will raise the price of its flagship Arab Light crude to Asia in August, reaching its highest level in four months.

Looking ahead, Goldman Sachs analysts anticipate that OPEC+ will approve another production rise—around 550,000 bpd—for September when the group convenes again on 3 August.

Separately, US President Donald Trump stated on Sunday that the country is on the verge of finalising multiple trade agreements. He added that notifications regarding new, higher tariff rates would be sent to other countries by 9 July, with those tariffs scheduled to come into force from 1 August.

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