Oil Drops as Larger OPEC Supply Increase Raises Glut Concerns
Brent slid as much as 1.6% toward $67 a barrel after falling 0.7% on Friday, and West Texas Intermediate was near $66. The group led by Saudi Arabia decided on Saturday to increase supply by 548,000 barrels a day, putting OPEC on track to unwind its most recent output cuts a year earlier than planned.
Alliance officials cited summer demand as one reason for their optimism that the extra barrels could be absorbed by the market, with the move answering President Donald Trump's calls for lower fuel costs.
The oil market has been volatile in recent weeks following the conflict between Israel and Iran, with a fragile truce now in place and focus shifting to OPEC supply and US trade policy. Trump's country-by-country tariffs will take effect Aug. 1, Commerce Secretary Howard Lutnick said, signaling some breathing room for trading partners ahead of a previous deadline of July 9.
OPEC previously announced hikes of 411,000 barrels a day for May, June and July — already three times faster than scheduled — and traders had expected the same amount for August. The increase amplifies a dramatic strategy pivot, from years of output restraint to reopening the taps to reclaim market share.
The boost was based on 'a steady global economic outlook and current healthy market fundamentals,' the group said in a statement on Saturday. Saudi Arabia followed with a price increase to its main crude grade for Asia next month, signaling confidence the market can withstand the extra OPEC supplies.
The alliance will consider adding another roughly 548,000 barrels a day in September at the next meeting on Aug. 3, according to delegates who asked not to be identified, which would complete the revival of 2.2 million barrels a day of supply shuttered in 2023.
To get Bloomberg's Energy Daily newsletter in your inbox, click here.
More stories like this are available on bloomberg.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
27 minutes ago
- Mint
Arun Maira: Dedication to the state's purpose is the key lesson we must learn from China
India is at a crossroads. Both the political Left and Right agree that the economy needs substantial reform, but disagree on the direction. The progressive Left wants more socialism with more liberal democracy; the conservative Right wants more free-market capitalism and seems willing to tolerate curbs on liberty. The Middle seems muddled. The 20th century was a test of competing economic ideologies—socialism versus capitalism; and competing forms of governance—liberal democracy versus authoritarianism. When the Soviet Union collapsed in 1991, victory was declared for the Washington Consensus of free market capitalism and liberal democracy. India's reformers adopted the Washington formula in 1991. By and large, they gave up on socialism, abandoned industrial policies aimed at growing domestic industries and opened the Indian market for foreign companies without technology-transfer requirements. China did not yield. It stayed its socialist course with single-party governance and continued to build domestic industries. Also Read: Ajit Ranade: The success of 'Made in China 2025' alarmed the West The growth of China's economy is a miracle, economists say. In the 1980s, China and India's economies were comparable in size and per capita income. Now, China's per capita income and GDP are about five times India's. China's high-tech manufacturing sector has grown 48 times larger. The US, meanwhile, has grown alarmed with China's remarkable economic growth and industrial strength despite Beijing not following Washington's economic formula. That consensus has ended even in Washington, where ideological cracks have appeared with increasing inequality and unrest among workers in the US. The US is pressing India to come closer to it. India is wary. China shares a border with India that has seen the two armies skirmish. India must become self-reliant and stronger much faster than it has so far. Reforms must result in faster income growth among the Indian masses and stronger domestic industries. India's leaders should study China for lessons before pushing harder with economic reforms based on the West's failing model. Also Read: China began de-risking its economy well before Trump's trade fury US capitalism and Chinese socialism: Three recent books offer insights into how socialism and capitalism have been combined to achieve China's inclusive and fast growth. China's leaders are good learners, says German political economist Isabella M. Weber in How China Escaped Shock Therapy: The Market Reform Debate. Like Mahatma Gandhi, they kept their minds open, allowing ideas to come in from all directions without being blown off their feet. They listened to Western economists but applied only what suited China. Weber says, 'The famous Harvard development economist Dani Rodrik represents the economics profession more broadly when he answers his own question of whether 'anyone (can) name the (Western) economists or the piece of research that played an instrumental role in China's reforms" by claiming that 'economic research, at least as conventionally understood" did not play 'a significant role." Chinese economist Keyu Jin, a professor at the London School of Economics who grew up in China and experienced the Chinese system from within, explains how the Chinese socio-economic-political system works in The New China Playbook: Beyond Socialism and Capitalism. She explains why Western economic models, which strip out cultural and social forces from economics, cannot comprehend how China works—or even how Western economies work. She makes visible the 'invisible hand' that free-market economists cannot explain. She explains why the Chinese government keeps financial markets and the private sector reined in to ensure the market produces welfare for all, especially poorer and least powerful citizens. She says, 'The number of financial crises in China is exactly zero. It is also an oddity (from a Western perspective) that despite the nation's preternatural economic growth, its stock market has been one of the worst performing in the world." Also Read: Chinese history shows how a closed economy could squander a nation's greatness The Chinese government has added citizen satisfaction and environmental sustainability to GDP as a measure of its own performance (and of local governments). Though private firms grew nine-fold in China from 2000 to 2019 (their number now exceeds the US's by far), 'A more striking fact," says Lin, 'is that private owners with state connections owned about a third of the capital registered by these companies, showing how pervasive equity linkages between state and private businesses have become in China's corporate sector." While the government has reduced the number of state-owned enterprises and pushed the remainder to add profits to their social objectives, it also demands that private firms comply with societal needs. Large, private, property and tech firms that strayed from the socialist path have been cut down. Three distinctive features of China's governance: The purpose of the state, throughout China's long history from imperial times to the Communist era, has been the welfare of citizens. The best emperor was seen as one who provides the most welfare to all citizens, not one who wins the most wars. The leadership of the Communist Party has continued this role, says Chinese political scientist Zheng Yongnian in The Chinese Communist Party as Organizational Emperor: Culture, Reproduction, and Transformation. Jin explains further (in The New China Playbook) how the ruling party's commitment to this role has shaped Beijing's socio-economic policies, resulting in widespread support for the party even among the young. Also Read: Rahul Jacob: Manufacturing is crying out for a reality check The governance of China is highly decentralized. Local communities are given freedom to craft solutions suited to their needs; the performance of local party officials is measured by the satisfaction of their communities with progress. Chinese leaders and economists are 'systems thinkers.' They see the economy as only a component of a complex social system. For them, the purpose of economic growth is the production of societal well-being, especially for less powerful people. Whenever the economy begins to fail this purpose, reforms are made to bring it back to its socialist moorings. India must not slavishly follow Western models. Nor can India be China. India must find its own way to create a more equitable society. The author is a former member of the erstwhile Planning Commission and the author of 'Reimagining India's Economy: The Road to a More Equitable Society'.
The Hindu
36 minutes ago
- The Hindu
Tesla shares fall as Musk's 'America Party' riles investors
Tesla shares fell over 3% on Monday, under pressure from investor concerns about the focus of boss Elon Musk after he announced he would form a new U.S. political party, marking a new escalation in his feud with President Donald Trump. Tesla stock fell over 3% in Frankfurt, pointing to another decline once premarket trading gets underway following the three-day weekend for Independence Day. Veteran tech analyst Dan Ives of Wedbush said Musk was Tesla's "biggest asset" and his decision to dive deeper into politics would likely put the company's shares under pressure. "Tesla needs Musk as CEO and its biggest asset and not heading down the political route yet at the same time getting on Trump's bad side," Ives said in a note on Sunday. "It would also not shock us if the Tesla board gets involved at some point given the political nature of this endeavour depending on how far Musk takes it." Trump on Sunday called Musk's plans to form the "America Party" "ridiculous," launching new barbs at the tech billionaire and saying the Musk ally he once named to lead NASA would have presented a conflict of interest given Musk's business interests in space.
New Indian Express
37 minutes ago
- New Indian Express
China says BRICS not seeking 'confrontation' after Trump tariff threat
BEIJING: China said on Monday that BRICS, the grouping that also includes Brazil, Russia and India, was not seeking "confrontation" after US President Donald Trump vowed to impose an extra 10 percent tariff on countries aligning with the bloc. "Regarding the imposition of tariffs, China has repeatedly stated its position that trade and tariff wars have no winners and protectionism offers no way forward," foreign ministry spokeswoman Mao Ning said. Trump said he would send the first tariff letters to various countries on Monday, days before his deadline for trading partners to reach a deal expires. He said on Sunday he would send a first batch of up to 15 letters, warning that US levies on imports would snap back to the high levels he set in April if countries failed to make agreements. And, in a post on his Truth Social network, he threatened a further 10 percent tariff on countries aligning themselves with the emerging BRICS nations, accusing them of "anti-Americanism" after they slammed his tariffs at a summit in Rio de Janeiro on Sunday. Conceived two decades ago as a forum for fast-growing economies, BRICS has come to be seen as a Chinese-driven counterbalance to US and western European power. However, Beijing defended the grouping on Monday as "an important platform for cooperation between emerging markets and developing countries". "It advocates openness, inclusivity and win-win cooperation," Mao said. "It does not engage in camp confrontation and is not targeted at any country," she said.
