Oil Prices Continue to Decline Due to OPEC+ Decision and US Customs Uncertainty
Global oil markets witnessed a significant decline in prices on Monday, July 7, as a result of the unexpected decision by the OPEC+ alliance to increase production rates beyond expectations, along with the ongoing uncertainty surrounding US customs tariffs and their potential impact on the global economy.
The decision made by the alliance on Saturday to increase production by 548,000 barrels per day in August had an impact on crude prices, with Brent crude futures falling by 0.4% to $67.99 per barrel, while West Texas Intermediate crude dropped by about 1.13% to $66.24 per barrel.
This decision comes after a series of gradual increases approved by the group in recent months, with the increase in May reaching 411,000 barrels per day, while it was limited to 138,000 barrels per day in April.
Tim Evans of Evans Energy commented on the decision, stating that "the production increase represents a more aggressive move in the competition for market shares, and implies an implicit acceptance of lower prices and revenues," according to Reuters.
In a broader analysis, Helima Croft and her team at RBC Capital Markets pointed out that this move reintroduces to the market approximately 80% of the voluntary cuts of 2.2 million barrels per day committed by eight OPEC member countries, noting that the actual increase in supplies remains below the planned level, with most of it concentrated in Saudi Arabia.
In a related development, analysts at Goldman Sachs expect OPEC+ to announce an additional production increase of up to 550,000 barrels per day for September, during their meeting scheduled for August 3.
On another note, oil markets face additional pressures due to the ongoing uncertainty surrounding US customs policies, as officials in Washington hinted at the possibility of delaying tariff imposition without providing clear details. US President Donald Trump announced on Sunday his country's intention to conclude several trade agreements in the coming days, notifying the concerned countries of the highest tariff rates by July 9, to be implemented on August 1.
In this regard, Priyanka Sachdeva, senior market analyst at Phillip Futures, stated that "market concerns over Trump's tariffs continue to be the main headline for the second half of 2025, while the weakness of the US dollar remains the sole support for oil prices currently."
