oil prices can be attributed to OPEC+’s decision to ramp up production significantly in August. Following the announcement, West Texas Intermediate crude prices dropped nearly 2% to approximately $65.75 per barrel, while Brent crude fell by about 1% . This increase in output, amounting to an additional 548,000 barrels per day, surpassed market expectations and contributed to downward pressure on oil prices . The heightened production aims to balance supply amid fluctuating global demand dynamics.
OPEC+, agreed on Saturday to raise production by 548,000 barrels per day in August.
"The increased production clearly represents a more aggressive competition for market share and some tolerance for the resulting decline in price and revenue," Tim Evans of Evans Energy said in a note.
The August increase represents a jump from monthly increases of 411,000 bpd OPEC+ had approved for May, June and July, and 138,000 bpd in April.
The decision will bring nearly 80% of the 2.2 million bpd voluntary cuts from eight OPEC producers back into the market, RBC Capital analysts led by Helima Croft said in a note.
OPEC+ previously announced hikes of 411,000 barrels a day for May, June and July — already three times faster than scheduled — and traders had expected the same amount for August. The increase amplifies a dramatic strategy pivot, from years of output restraint to reopening the taps to reclaim market share.
U.S. economic policies.Lingering worries about trade negotiations added to the negative sentiment.
Market analysts suggest that the short-term market reaction is likely to remain volatile, with potential for further declines if trade talks don't progress. The energy sector could be particularly vulnerable, given the intersection of trade policy and international oil prices.
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