Oil Price Summary: OPEC+ Prepares for Output Increase, US Tariff Policies Watched
Oil prices stabilized on Tuesday, July 1, 2025, after an earlier slide in the session, as the market weighed expectations of an OPEC+ output hike for August in an upcoming meeting.
Current Situation:
- Brent crude rose $0.10, or 0.2%, to $66.84 a barrel.
- U.S. West Texas Intermediate (WTI) crude inched up $0.09, or 0.1%, to $65.20 a barrel.
Factors Influencing the Market:
- OPEC+ Output Increase:
- ANZ analysts noted that the market is concerned OPEC+ will continue with an accelerated rate of output increases.
- Four OPEC+ sources indicated the group plans to raise output by 411,000 barrels per day (bpd) in August, following similar hikes in May, June, and July.
- If approved, this would bring OPEC+’s total supply increase for the year to 1.78 million bpd, equivalent to over 1.5% of global oil demand.
- OPEC+ is scheduled to meet on July 6.
- ING commodities strategists believe these larger supply increases should leave the global oil market well supplied for the remainder of the year. Expectations for a comfortable oil balance and significant OPEC spare production capacity appear to be comforting the market.
- Uncertainty about U.S. Tariffs:
- U.S. Treasury Secretary Scott Bessent warned that countries could be notified of sharply higher tariffs, despite good-faith negotiations, as a July 9 deadline approaches.
- Tariff rates are scheduled to revert from a temporary 10% level to President Donald Trump’s suspended rates of 11% to 50%, which were announced on April 2.
Expert Outlook:
- Morgan Stanley expects Brent futures to retrace to around $60 by early next year, due to a well-supplied market and abating geopolitical risks following the Israel-Iran de-escalation.
- They anticipate an oversupply of 1.3 million bpd in 2026.
Impact of Geopolitical Events:
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- A 12-day conflict, which began with Israel targeting Iran’s nuclear facilities on June 13, initially pushed Brent prices above $80 a barrel after the U.S. bombed Iranian nuclear sites.
- Prices then slumped to $67 after Trump announced an Iran-Israel ceasefire.
- Ref: https://www.reuters.com/business/energy/oil-edges-down-expectations-more-opec-supply-tariff-fears-2025-07-01/
- Keywords: Oil prices, OPEC+, Output increase, US tariffs, Trade war, Oil market, Brent, WTI, Global growth