Oil Prices Climb Nearly 3% as Canadian Wildfires Threaten Supply, Trump Tariffs Pressure Dollar
Oil prices surged on Monday, climbing close to 3%, as concerns over supply disruptions in Canada and a weaker U.S. dollar outweighed the impact of OPEC+’s decision to continue raising output.
Brent crude settled up $1.85, or 2.95%, at $64.63 per barrel, while U.S. West Texas Intermediate (WTI) rose $1.73, or 2.85%, to $62.52.
Wildfires in Alberta, Canada’s key oil-producing province, have curtailed approximately 7% of national crude production as of Monday, based on Reuters estimates. Over the weekend, two thermal oil sands operators south of Fort McMurray evacuated personnel and shut down operations as a safety measure.
“The Alberta wildfires are beginning to impact supply,” said John Kilduff, partner at Again Capital in New York.
Adding to oil’s gains, the U.S. dollar weakened across the board, weighed down by concerns that President Trump’s renewed tariff threats could stall economic growth and reignite inflation fears.
A softer dollar makes oil and other dollar-denominated commodities more affordable for foreign buyers, boosting demand.
Geopolitical tensions also contributed to the price uptick. Ukrainian drone attacks on Russia over the weekend heightened risk sentiment, according to Rystad Energy analyst Jorge Leon.
Meanwhile, uncertainty around Iran-U.S. nuclear negotiations kept markets uneasy. An Iranian diplomat indicated that Tehran was likely to reject a U.S. offer aimed at resolving the long-standing dispute, even after a fifth round of talks in Rome showed modest progress.
Despite the upward price momentum, OPEC+ announced on Saturday it would go ahead with a previously agreed output increase of 411,000 barrels per day (bpd) in July—its third straight monthly hike. The move is part of a broader strategy to reclaim market share and penalize members exceeding output quotas.
Sources close to the discussions noted that the group could consider a larger production boost.
Oil market participants said the expected July increase was already factored into Brent and WTI prices. Some had anticipated a more aggressive hike.
“The market was positioned for a bigger increase—they got caught off guard,” said Phil Flynn, senior analyst at Price Futures Group.
Goldman Sachs analysts projected that OPEC+ would follow through with a final 410,000 bpd increase in August. In a note, the bank said strong near-term demand, resilient global economic data, and seasonal summer consumption would likely prevent a slowdown in output hikes when the group reconvenes on July 6.
Morgan Stanley echoed similar expectations, forecasting monthly increases of 411,000 bpd through October, totaling about 2.2 million bpd.
“There’s little indication that OPEC+ is easing the pace of production increases,” the bank’s analysts commented.
