Oil falls as OPEC+ proceeds with September output hike
Brent crude futures fell 85 cents, or 1.2 per cent, to $68.82 a barrel by 0846 GMT, and U.S. West Texas Intermediate crude declined 82 cents, or 1.2 per cent, to $66.51 a barrel. Both contracts closed about $2 lower on Friday.
The Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, agreed on Sunday to raise oil production by 547,000 barrels per day for September, the latest in a series of accelerated output hikes to regain market share.
The move, in line with market expectations, marks a full and early reversal of OPEC+'s largest tranche of output cuts, amounting to about 2.5 million bpd, or about 2.4 per cent of world demand.
Analysts at Goldman Sachs expect that the actual increase in supply from the eight OPEC+ countries that have raised output since March will be 1.7 million bpd, because other members of the group have cut output after previously overproducing.
Investors also continued to digest the impact of the latest U.S. tariffs on exports from dozens of trading partners.
Still, investors remain wary of further U.S. sanctions on Russia, as Trump has threatened to impose 100 per cent secondary tariffs on Russian crude buyers as he seeks to pressure Moscow into halting its war in Ukraine.
"In the medium term, oil prices will be shaped by a mix of tariffs and geopolitics. Any price jump triggered by energy sanctions is expected to be ephemeral," PVM analyst Tamas Varga said.
At least two vessels loaded with Russian oil bound for refiners in India have diverted to other destinations following new U.S. sanctions, trade sources said on Friday and LSEG trade flows showed.
This puts about 1.7 million bpd of crude supply at risk if Indian refiners stop buying Russian oil, ING analysts said in a note.
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