Oil prices saw a decline on Friday, marking the potential for the first weekly loss in a month. Reports emerged that OPEC+ is considering boosting supply again in July, leading to a drop in oil prices. Brent crude, which serves as the global oil benchmark, fell by 0.65% to $64.02 a barrel at 12:19 am UAE time. West Texas Intermediate (WTI), the US oil gauge, decreased by 0.69% to $60.78 per barrel. This price decline follows a surge earlier in the week, with Brent and WTI expected to lose 2% on a weekly basis.
Weekly Loss Expected After Price Surge
The benchmarks are heading for their first weekly loss in a month after prices surged on Tuesday. Despite the brief rebound, the oil market has experienced a significant pullback this year, with Brent and WTI both down approximately 15%. This sharp decline is attributed to the ongoing market volatility driven by production increases and the uncertainty surrounding global demand. Analysts have stated that further price movements will depend on developments in the production strategies of OPEC+ and the broader global economy.
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OPEC+ Plans Potential Output Boost in July
OPEC+ producers, led by Saudi Arabia and Russia, had previously announced output increases of 411,000 barrels per day for May and June. It is likely that the group will announce a similar increase for July during its meeting on June 1. Bloomberg reported that delegates suggested an output boost, although no final decision has been made. The ongoing production increases from OPEC+ have raised concerns about the potential for oversupply in the market, especially if the pace continues into the second half of the year.
Uncertain Demand Outlook Amid Trade Tensions
Demand prospects for oil remain uncertain due to the ongoing trade tensions triggered by sweeping tariffs announced by the Trump administration. Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, explained that OPEC+ might be attempting to appease President Donald Trump, who has long advocated for lower energy prices. There may also be a strategy to penalize member states that have repeatedly breached their production quotas. OPEC+ appears less willing to reduce supply to support prices, as geopolitical tensions alone are unlikely to push prices sustainably higher without further escalation.
OPEC+ to Scale Back Production Later in 2025
The evolution of OPEC+ policy over the coming months is influenced by internal compliance issues and broader oil market developments, according to analysts at Saudi Arabia’s Jadwa Investment. They suggested that the group may scale back production increases later in the year as global oil inventories begin to rise. If OPEC+ continues to increase production at the same rate as in May and June, the analysts warned that production could exceed previous plans for October 2026, leading to a significant oversupply.
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Market Share Pressure and US Relations
A looser production strategy from OPEC may present an opportunity to place pressure on higher-cost oil producers, allowing OPEC to regain market share. This approach would also align with President Trump’s desire for lower oil prices and could help strengthen relations with the US. The Jadwa analysts emphasized that the potential for oversupply in the market could affect the balance between OPEC production and rising non-OPEC+ oil output.
Geopolitical Tensions and Trade Truce Impact
The oil market is also facing continued uncertainty as it waits for the outcome of a potential US-Iran nuclear deal and developments in tariff negotiations with key trading partners. A particular focus remains on talks with China, the US’s largest trading partner. The two nations, central figures in the ongoing trade war, agreed to a 90-day trade truce following a meeting in Geneva earlier this month. The continuation of trade talks is view as a sign of progress toward resolving tariff disputes, which could have broader implications for the global economy and oil prices.
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