Oil Prices Slip as Geopolitical Tensions Ease and OPEC+ Prepares to Boost Output

Oil prices declined on Monday amid signs of easing geopolitical tensions in the Middle East and growing expectations of another output hike by OPEC+ in August, even as concerns over global demand continued to weigh on market sentiment.

Brent crude futures dipped by 12 cents, or 0.18 percent, to $67.65 per barrel as of 10:18 a.m. Saudi time, just hours before the August contract’s expiry. The more actively traded September contract slipped by 24 cents to $66.56. Meanwhile, US West Texas Intermediate (WTI) crude fell by 36 cents, or 0.55 percent, to $65.16 per barrel.

The modest losses follow a volatile period in global oil markets. Although both benchmarks recorded their sharpest weekly drops since March 2023 last week, they remain on track to close June with monthly gains exceeding 5 percent — their second straight month of positive performance.

A major driver behind recent price movements was the brief military escalation between Israel and Iran earlier in June. The conflict, which began on June 13 with Israeli strikes on Iranian nuclear facilities and escalated following US military involvement, initially sent Brent crude prices soaring above $80 per barrel. However, prices plummeted after US President Donald Trump brokered a ceasefire between the two nations, removing much of the geopolitical risk premium from the market.

“The market has stripped out most of the geopolitical risk premium built into the price following the Iran-Israel ceasefire,” noted Tony Sycamore, market analyst at IG Markets.

Adding to the downward pressure, four OPEC+ delegates confirmed that the group is expected to raise oil production by 411,000 barrels per day in August. This would follow similar output hikes in May, June, and July as the coalition gradually rolls back voluntary production cuts introduced earlier this year. The group’s next policy meeting is scheduled for July 6.

This planned increase in supply comes at a time when concerns about global oil demand — especially from China — are mounting. China’s manufacturing sector contracted for a third consecutive month in June, with weak domestic demand and sluggish exports exacerbated by ongoing trade uncertainty with the United States.

“The uncertainty around global growth continues to cap prices,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. She added that the market remains under pressure from both supply-side shifts and faltering economic indicators.

In the United States, the number of active oil rigs — a key gauge of future production — declined by six to 432 last week, marking the lowest level since October 2021, according to data from Baker Hughes. While this suggests a potential slowdown in US output, it has so far done little to bolster bullish sentiment.

With supply rising and demand outlooks weakening, analysts suggest oil markets may remain under pressure heading into the second half of the year.