LONDON: Oil prices fell on Monday after the OPEC+ alliance announced a larger-than-anticipated increase in production for August, raising fresh concerns about oversupply and intensifying market competition.
Brent crude futures dropped 80 cents, or 1.2%, to $67.50 per barrel by 0010 GMT, while U.S. West Texas Intermediate (WTI) crude slipped $1.32, or 2%, to $65.68 per barrel.
The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed over the weekend to raise production by 548,000 barrels per day (bpd) in August. The increase marks a notable jump from previous monthly increments of 411,000 bpd for May through July and 138,000 bpd in April.
“This move signals a more aggressive competition for market share, alongside a willingness to accept potential declines in price and revenue,” said Tim Evans, energy analyst at Evans Energy.
OPEC+ attributed the decision to a stable global economic outlook, strong market fundamentals, and historically low oil inventories. The group’s move will restore nearly 80% of the 2.2 million bpd in voluntary output cuts implemented by eight key OPEC members earlier this year, according to RBC Capital Markets analysts led by Helima Croft.
However, analysts noted that actual production increases have lagged behind official targets, with Saudi Arabia contributing the bulk of the additional barrels so far.
In a sign of confidence in demand recovery, Saudi Arabia raised its official selling price for Arab Light crude destined for Asia in August to a four-month high.
Looking ahead, analysts at Goldman Sachs expect OPEC+ to announce an additional 550,000 bpd increase for September at the group’s next meeting scheduled for August 3.
Meanwhile, geopolitical developments in the U.S. added further market tension. President Donald Trump announced on Sunday that the United States is close to finalizing new trade agreements and would notify trading partners of increased tariff rates by July 9, with implementation expected from August 1.
The dual impact of rising oil supply and potential trade friction has added uncertainty to global energy markets already navigating fragile post-pandemic demand recovery.
