Crude oil prices are set for another weekly decline following OPEC+’s decision to boost production by 411,000 barrels daily in July, marking the third consecutive increase. This move doubles down on a historic policy shift that has sent crude prices sinking. As of the weekend, Brent crude was trading at $62.78 per barrel, with West Texas Intermediate at $60.79 per barrel.
“OPEC+ isn’t whispering anymore,” said Jorge Leon, an analyst at Rystad Energy A/S. “May hinted, June spoke clearly, and July came with a megaphone.”
Oil prices briefly crashed to a four-year low under $60 a barrel in April after OPEC+ announced it would bolster output by triple the scheduled amount, amid faltering demand and President Donald Trump’s trade war. Delegates have offered varying explanations for Riyadh’s pivot, including appeasing Trump or reclaiming market share from US shale drillers. Others suggest OPEC+ is satisfying robust demand or punishing members like Kazakhstan and Iraq for cheating on output quotas.
The strategy transition poses financial peril for oil producers in OPEC+ and worldwide. ING commodity analysts expect similar increases until the end of the third quarter, weighing on prices in the coming months. “We expect similar increases through until the end of the third quarter, as the group increases its focus on defending market share,” they wrote.
Despite geopolitical instability in the Middle East, oil prices have remained within a narrow band over the past two months. Libertex analysts attribute this to Trump’s tariffs, recession fears, and sticky inflation, which combine to challenge oil’s growth. However, data showing US oil inventories shrank by 4.24 million barrels last week suggests strong demand, which could lead to higher prices in the short term.
Yet, fears of a recession could keep oil prices in check, with the US economy shrinking 0.3% in Q1 2025. Saudi Arabia is expected to lower its official oil prices for July to their lowest levels since January, providing cheap oil to the Asian market. The EU and UK anticipate significant price drops, pushing the US to lower the price cap on Russian oil from $60 to $50 a barrel.