Global Oil Market Reacts as OPEC+ Boosts Production Targets
PERTH/SINGAPORE — Oil prices edged lower on Monday after OPEC+ agreed to further increase output targets from August, while exports from key producers via the Strait of Hormuz are recovering, potentially adding to global supplies.
Brent crude futures fell 34 cents, or 0.47 percent, to $71.78 a barrel, while US West Texas Intermediate crude was at $68.49 a barrel, down 20 cents, or 0.29 percent.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed on Sunday to raise output targets by 188,000 barrels per day from August, on top of similar increases for June and July. However, the increase has remained largely on paper because of the US-Israeli war with Iran, which closed the Strait of Hormuz to tanker traffic for key producers including Saudi Arabia, Kuwait, and Iraq, capping their output.
“The number was largely in line with expectation,” said IG market analyst Tony Sycamore. “With UAE leaving and quotas probably still not being met due to production still ramping up after the conflict — I’m not sure they mean much at the moment.”
The UAE quit OPEC as of May 1. Gulf members have begun reviving supplies shut during the Iran war and are increasing exports. OPEC oil output in June rose by 3.3 million barrels per day month-on-month to 19.43 million bpd, recovering from its lowest in more than two decades. Gulf oil exports in June jumped more than 3 million barrels from May to exceed 10 million barrels per day, though the volume remained 40 percent below pre-war levels.
“Coming off the US long weekend, traders are sitting tight and waiting to see whether US-Iran relations will be cordial or volatile this week,” said Tim Waterer, chief market analyst at KCM Trade.
In addition, oil shipments from Russia’s western ports hit a record high in June and are expected to maintain that level in July, as refineries damaged in drone attacks by Ukraine have forced Moscow to boost crude exports, industry sources said.
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