Oil prices dip as Middle East tensions ease, OPEC+ signals further supply boost 

SINGAPORE: Oil prices dropped by 1 per cent on Monday, driven by a reduction in geopolitical tensions in the Middle East and expectations of another production increase by OPEC+ in August, which improved the global supply outlook. 

Brent crude futures declined by 66 cents, or 0.97 per cent, to $67.11 a barrel by 0031 GMT, ahead of the expiry of the August contract later in the day. The more actively traded September contract fell 83 cents to $65.97 a barrel.

Meanwhile, US West Texas Intermediate (WTI) crude slipped by 94 cents, or 1.43 per cent, to $64.58 a barrel. 

Despite last week’s decline, the steepest for both benchmarks since March 2023, oil prices are still on track to end June with gains of over 5 per cent for the second consecutive month. 

Earlier in June, a 12-day conflict that began on June 13 with Israel targeting Iran’s nuclear facilities drove Brent crude above $80 per barrel. However, prices plunged to $67 following a ceasefire between Iran and Israel, announced by US President Donald Trump after American airstrikes on Iranian nuclear sites. 

“The market has now priced out most of the geopolitical risk premium that had been built in,” said Tony Sycamore, analyst at IG Markets. 

Adding further pressure, four OPEC+ delegates indicated that the group plans to raise output by 411,000 barrels per day in August, continuing monthly increases that began in May. Similar production hikes are already scheduled for May, June and July. 

OPEC+ is scheduled to meet on July 6 to finalise its production strategy, which marks the fifth consecutive monthly adjustment since it began unwinding earlier output cuts in April. 

In the US, the number of active oil rigs, a key indicator of future production, declined by six to 432 last week, marking the lowest count since October 2021, according to energy services firm Baker Hughes. 

Read next: Trump says “we have a buyer for TikTok”