Singapore — Oil prices edged down on Tuesday, weighed by the expectation of an Opec+ output hike in August and concern of an economic slowdown driven by prospects of higher US tariffs.
Brent crude fell 30c, or 0.5%, to $66.44 a barrel by 4.30am GMT, while US West Texas Intermediate (WTI) crude edged lower 33c, or 0.5%, to $64.78 a barrel.
“The market is now concerned that the Opec+ alliance will continue with its accelerated rate of output increases,” ANZ senior commodity strategist Daniel Hynes said in a note. Four Opec+ sources told Reuters last week that the group planned to raise output by 411,000 barrels a day in August, following similar hikes in May, June and July.
If approved, this would bring Opec+’s total supply increase for the year to 1.78-million barrels a day, equivalent to more than 1.5% of global oil demand. Oil cartel Opec and its allies including Russia, together known as Opec+, will meet on July 6.
“These larger supply increases should leave the global oil market well supplied for the remainder of the year,” ING commodities strategists said.
“Expectations for a comfortable oil balance, along with a large amount of Opec spare production capacity, appear to be comforting the market,” ING added.
Uncertainty about US tariffs and their impact on global growth also kept a lid on oil prices. US treasury secretary Scott Bessent warned that countries could be notified of sharply higher tariffs despite good-faith negotiations as a July 9 deadline approaches, when tariff rates are scheduled to revert from a temporary 10% level to President Donald Trump’s suspended rates of 11% to 50% announced on April 2.
Morgan Stanley expects Brent futures to retrace to around $60 by early next year, with the market being well supplied and geopolitical risk abating following the Israel-Iran de-escalation. It expects an oversupply of 1.3-million barrels a day in 2026.
A 12-day war that started with Israel targeting Iran’s nuclear facilities on June 13 pushed up Brent prices. They surged above $80 a barrel after the US bombed Iran’s nuclear facilities and then slumped to $67 after Trump announced an Iran-Israel ceasefire.
Reuters
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