Oil prices fall 1% as OPEC+ announces increase in output
Around 7:30 am, the August contract of Brent on the Intercontinental Exchange was trading at $67.62 per barrel, lower 1.04% from its previous close. The August contract of West Texas Intermediate (WTI) on the NYMEX was at $68.53, lower by 0.67% from its previous close.
Eight OPEC+ members—Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman—met virtually on 5 July and agreed to raise production by 548,000 barrels per day (bpd) in August. This is higher than the phased hike of 411,000 bpd implemented from May through July.
In a statement dated 5 July, OPEC said: "In view of a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories, and in accordance with the decision agreed upon on 5 December 2024 to start a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from 1 April 2025, the eight participating countries will implement a production adjustment of 548 thousand barrels per day in August 2025 from July 2025 required production level."
It, however, said that the gradual increases may be paused or reversed subject to evolving market conditions. This flexibility will allow the group to continue to support oil market stability, it added.
The eight OPEC+ countries will hold monthly meetings to review market conditions, conformity, and compensation. The eight countries will meet on 3 August 2025 to decide on September production levels.
Oil supply growth will outpace demand and weigh on prices, S&P Global Commodity Insights said in a recent analysis. While the Israel-Iran conflict pushed Brent near $80 a barrel in June, the resulting price spike was short-lived. The uneasy ceasefire has done little to shift the underlying trajectory of global oil markets, the report noted.
Jim Burkhard, vice president and global head of crude oil research, S&P Global Commodity Insights had said in the note on 2 July: 'The underlying fundamentals of the global oil market remain profoundly unchanged. OPEC+ members are continuing with the accelerated unwinding of production cuts. There will be more oil supply coming from the Middle East in July. Meanwhile, global demand growth remains weak. In other words, there is plenty of oil available.'
S&P Global Commodity Insights expects supply to outstrip demand by 1.2 million barrels per day in the second half of 2025, contrary to the same period in 2024 when demand exceeded supply, followed by a surplus of 800,000 barrels per day in 2026.
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