Oil prices declined Monday after the OPEC+ alliance announced a larger-than-anticipated production increase for August, while the US heightened trade tensions with a fresh warning of tariff hikes by July 9.
International benchmark Brent crude fell by 0.4%, trading at $67.67 per barrel at 10 a.m. local time (0700 GMT), down from $67.92 at the previous session's close.
Similarly, US benchmark West Texas Intermediate (WTI) decreased by about 0.2%, settling at $65.48 per barrel, compared to $65.65 in the prior session.
The producer alliance—comprising OPEC and its allies—said Saturday it would raise August output by 548,000 barrels per day (bpd), significantly above the monthly hikes of 411,000 barrels approved for May through July, and April's 138,000-barrel rise.
The decision fueled concerns about a potential supply glut. Analysts view the move as signaling intensified competition for market share and a willingness to accept softer prices and revenue declines.
The increase would effectively reverse about 80% of the 2.2 million bpd in voluntary output cuts introduced by eight OPEC members. However, much of the recent supply growth has come from Saudi Arabia, as others have struggled to meet their quotas.
In a separate bullish signal, Saudi Arabia raised the official selling price for its Arab Light crude to Asia for August—the highest in four months—indicating confidence in regional demand.
Markets now expect OPEC+ to formalize a final 550,000 bpd increase for September during its next meeting, scheduled for August 3.
Adding to the bearish sentiment, investor anxiety mounted over US tariff policy and its implications for global economic growth. US officials said tariff changes would be delayed but offered no clear timeline or details.
US President Donald Trump said multiple trade agreements were nearing completion and warned that countries would be notified of new, higher tariffs by July 9. The new rates are expected to take effect on August 1.
In April, Trump introduced a 10% baseline tariff on most imports, with the potential for rates as high as 50% under a "reciprocity" framework. He later added to the uncertainty, suggesting tariffs could range anywhere from 10% to 70%.
Analysts say trade tensions will remain a dominant theme through the second half of 2025. For now, the only factor offering oil prices any support is a weaker US dollar.
By Duygu Alhan
Anadolu Agency
energy@aa.com