Oil Prices Rebound After OPEC+ Maintains Modest Output Hike

Oil prices surged more than $1 a barrel on Monday, bouncing back from last week’s declines after OPEC+ opted to maintain a moderate production increase for July. The decision offered relief to markets that had braced for a more aggressive output hike.

Brent crude futures rose $1.46, or 2.33%, to $64.24 a barrel by 9:26 a.m. Saudi time, reversing some of Friday’s 0.9% drop. U.S. West Texas Intermediate (WTI) crude climbed $1.66, or 2.73%, to $62.45 a barrel, following a 0.3% decline in the previous session. Despite Monday’s gains, both benchmarks ended last week over 1% lower.

The Organization of the Petroleum Exporting Countries and allies, collectively known as OPEC+, announced on Saturday that they would raise production by 411,000 barrels per day in July—the same increment agreed for May and June. Market participants had feared a larger increase, which could have pressured prices further.

“Had they gone through with a surprise larger amount, then Monday’s price open would have been pretty ugly indeed,” said Harry Tchilinguirian, analyst at Onyx Capital Group.

The decision is also seen as a warning to member countries such as Iraq and Kazakhstan, which have repeatedly exceeded their output quotas. A report from Russia’s Interfax news agency last week quoted Kazakhstan’s deputy energy minister as saying the country does not plan to cut back production.

Analysts at the Commonwealth Bank of Australia noted that the output policy appears aimed at reining in non-compliant members and maintaining control over market dynamics.

Looking ahead, Goldman Sachs analysts forecast one final increase of 410,000 barrels per day in August, as OPEC+ continues to respond to improving demand and tight supply. The group is expected to decide on August production levels at its July 6 meeting.

Meanwhile, U.S. fuel inventories remain low, adding to supply concerns as hurricane season begins. Analysts at ANZ pointed to a sharp rise in gasoline demand, with a nearly 1 million bpd increase—one of the largest weekly gains in recent years—coinciding with the start of the American driving season.

In a further sign of tightening U.S. supply, the number of active oil rigs fell for the fifth straight week, dropping by four to 461—the lowest level since November 2021, according to Baker Hughes.

Despite high production earlier this year, U.S. output may begin to ease in response to recent price fluctuations and operational slowdowns.