Oil futures edged down on Monday after OPEC+ approved an additional increase in its production targets starting in August, while shipments from major producers through the Strait of Hormuz continued to rebound - a combination that could add to global supply.
By 00:10 GMT, Brent crude futures were down $0.24, or 0.33%, at $71.88 a barrel, after closing 0.45% higher on Friday. U.S. West Texas Intermediate (WTI) was trading at $68.58 a barrel, down $0.11, or 0.16%. There was no WTI settlement on Friday because U.S. markets were closed ahead of the Independence Day holiday on Saturday.
Markets were relatively steady last week after mostly trending lower in recent weeks, as investors continued to monitor both negotiations between the United States and Iran over shipping through the Strait of Hormuz and the pace of recovery in Gulf oil exports.
On Sunday, the Organization of the Petroleum Exporting Countries and its allies including Russia agreed to raise output targets by 188,000 barrels per day from August, adding to comparable increases that were set for June and July. Analysts noted, however, that the headline number may not immediately translate into higher physical supply.
"The number was largely in line with expectation," said IG market analyst Tony Sycamore. "With UAE leaving and when quotas are 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 United Arab Emirates formally left OPEC as of May 1. Meanwhile, Gulf members have started to bring back volumes that were curtailed during the conflict involving Iran, and overall exports from the region have been increasing.
A Reuters survey found that OPEC oil output in June rose by 3.3 million barrels per day month-on-month to 19.43 million bpd, recovering from the group’s lowest level in more than two decades. Gulf oil exports in June climbed by more than 3 million barrels per day from May to top 10 million bpd, though that throughput still remained about 40% below pre-war levels, according to data cited in the survey.
At the same time, shipments from Russia’s western ports reached a record high in June and are expected to stay at that level into July. Industry sources said those flows have been bolstered after damage to some domestic refineries, attributed to drone attacks by Ukraine, forced Moscow to increase crude exports.
The market reaction to OPEC+’s incremental production increases has been tempered by logistical and geopolitical constraints. While headline targets point toward additional supply on paper, the actual rate at which crude reaches global markets depends on the reopening of key shipping routes and the pace at which producers can restore output curtailed by conflict.
For now, traders are balancing the modest price declines against signs of rising exports from the Gulf and higher Russian shipments, keeping near-term price moves subdued.