Oil Eases Losses as Tight Market Conditions Balance OPEC+ Output Hike and Tariff Worries
Oil prices trimmed earlier losses on Monday as tight global supply helped counterbalance concerns over OPEC+’s larger-than-expected output hike and potential demand pressures from U.S. tariff policies.
OPEC and its allies (OPEC+), announced on Saturday that they will increase oil production by 548,000 barrels per day (bpd) in August—exceeding the 411,000 bpd monthly hikes agreed over the past three months.
Brent crude dropped to an intraday low of $67.22 per barrel but recovered slightly to $68.08 by 0815 GMT, down 22 cents or 0.3%. U.S. West Texas Intermediate (WTI) crude was down 37 cents, or 0.6%, at $66.63 after earlier hitting a low of $65.40.
Despite the production hike, the physical market remains tight. “The oil market still appears undersupplied and capable of absorbing the extra barrels,” said UBS analyst Giovanni Staunovo.
According to RBC Capital Markets, led by Helima Croft, the latest OPEC+ decision will restore nearly 80% of the 2.2 million bpd in voluntary cuts previously made by eight OPEC producers. However, RBC noted that actual supply additions have so far lagged planned increases, with most of the additional output coming from Saudi Arabia.
Reinforcing market confidence, Saudi Arabia raised the price of its key Arab Light crude for Asian buyers to the highest level in four months for August deliveries.
Looking ahead, Goldman Sachs analysts anticipate OPEC+ will implement a final 550,000 bpd output hike for September, likely to be announced at the group’s next meeting on August 3.
Oil prices were also pressured by uncertainty around U.S. tariffs. While officials indicated that new tariffs would be delayed, no clear guidance was given on the scope or timeline of the rate adjustments. This added to investor concerns that higher tariffs could hamper economic growth and reduce oil demand.
“Worries over Trump-era tariffs continue to dominate the second half of 2025, with dollar weakness providing the only real support for oil,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
