Bengaluru/Singapore — Oil prices drifted lower on Tuesday on oversupply concerns as Opec+ moved ahead with another large output hike despite a weak demand outlook, more than offsetting the potential for tighter Russian oil trade due to US policies.
Brent crude futures dipped 11c, or 0.16%, to $68.65 a barrel by 4.24am GMT. US West Texas Intermediate crude was down 12c, or 0.18%, to $66.17 a barrel.
It was the fourth consecutive decline for both contracts, which fell by more than 1% in the previous session to settle at their lowest in a week.
Both benchmarks had receded because extra capacity from Opec+ was acting as a buffer for any shortcomings in Russian barrels, said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
Oil cartel Opec and its allies, together known as Opec+, agreed on Sunday to raise oil production by 547,000 barrels a day for September.
It marks a full and early reversal of the group’s largest tranche of output cuts, amounting to about 2.5-million barrels a day, or about 2.4% of global demand, though analysts caution the actual amount returning to the market will be less.
The rising supply is coupled with concern about demand, with some analysts expecting faltering economic growth in the second half of the year.
JPMorgan analysts said on Tuesday the risk of a US recession was high as labour demand has stalled. In addition, China’s July Politburo meeting signalled no additional policy easing with the focus shifting to structural rebalancing of the world’s second-largest economy, the analysts wrote in a note.
The prospect of weak economic fundamentals is overshadowing concern over possible supply disruptions that previously supported oil prices.
US President Donald Trump has said he could impose 100% secondary tariffs on Russian crude buyers such as India after announcing a 25% tariff on Indian imports in July.
On Monday, Trump again threatened higher tariffs on Indian goods over the Russian oil purchases. New Delhi called his attack “unjustified” and vowed to protect its economic interests, deepening the trade rift between the two countries.
India is the biggest buyer of seaborne crude from Russia, importing about 1.75-million barrels a day from January to June this year, up 1% from a year ago, according to data provided to Reuters by trade sources.
Traders are also awaiting any developments on the latest US tariffs on its trading partners, which analysts fear could slow economic growth and dampen fuel demand.
Reuters
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