Oil prices fell on Tuesday, driven by expectations of increased OPEC+ production in August and fears of an economic slowdown due to the prospect of higher US tariffs, writes UNN with reference to Reuters.
Details
Brent crude fell 30 cents, or 0.5%, to $66.44 a barrel by 04:30 GMT (07:30 Kyiv time), while US West Texas Intermediate crude fell 33 cents, or 0.5%, to $64.78 a barrel.
"The market is now concerned that the OPEC+ alliance will continue its accelerated pace of production increases," ANZ senior commodities strategist Daniel Hynes said in a note.
Last week, four OPEC+ sources told Reuters that the group plans to increase output by 411,000 barrels per day in August, following similar increases in May, June, and July.
If approved, the total OPEC+ supply increase for the year would amount to 1.78 million barrels per day, equivalent to more than 1.5% of global oil demand. OPEC and its allies, including Russia, together known as OPEC+, will meet on July 6.
"These larger supply increases should ensure that the global oil market is well supplied for the remainder of the year," ING commodity strategists said.
"The expectation of a comfortable oil balance, as well as a large amount of OPEC's available production capacity, appear to be reassuring the market," ING added.
Uncertainty over US tariffs and their impact on global growth also weighed on oil prices. US Treasury Secretary Scott Bessent warned that countries could be notified of sharply higher tariffs, despite "good faith" talks as the July 9 deadline approaches, when tariff rates are set to revert from a temporary 10% to President Donald Trump's suspended rates of 11% to 50%, announced on April 2.
Morgan Stanley expects Brent crude futures to rebound to around $60 early next year as the market will be well supplied and geopolitical risk will decrease after the de-escalation of Israeli-Iranian relations. The company expects an oversupply of 1.3 million barrels per day in 2026.
The 12-day war, which began with an Israeli attack on Iran's nuclear facilities on June 13, led to a surge in Brent crude prices. They soared above $80 a barrel after the US bombed Iran's nuclear facilities, then fell to $67 after Trump announced a ceasefire between Iran and Israel.