Oil Prices Stabilize as Tight Supply Counters OPEC+ Output Increase and Tariff Concerns

Oil prices pared earlier losses on Monday, as a tighter-than-expected physical market helped offset pressure from a larger-than-anticipated production hike by OPEC+ and uncertainty surrounding US trade policy, Reuters reports.

Brent crude futures, which had dipped to $67.22 per barrel, recovered slightly to trade at $68.08, down 22 cents or 0.3% by 08:15 GMT. US West Texas Intermediate (WTI) crude also reduced losses, last trading at $66.63, down 37 cents or 0.6%, after falling as low as $65.40 earlier in the session.

Over the weekend, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced they would increase oil production by 548,000 barrels per day (bpd) in August. This is a larger output boost than the group’s prior monthly increases of 411,000 bpd over the past three months.

According to analysts at RBC Capital, the decision will bring back nearly 80% of the 2.2 million bpd in voluntary cuts made earlier this year by eight OPEC member countries. Much of the recent supply, however, has been driven by Saudi Arabia, and actual increases have trailed planned targets.

Still, analysts suggest the market remains resilient.

“For now, the oil market remains tight, suggesting it can absorb additional barrels,” said Giovanni Staunovo, an analyst at UBS.

In a sign of confidence in demand, Saudi Arabia raised the official selling price of its flagship Arab Light crude for August delivery to Asia, marking a four-month high.

Looking ahead, Goldman Sachs analysts expect OPEC+ to authorize a final 550,000 bpd output increase for September, potentially to be announced at the group’s next meeting scheduled for August 3.

Oil markets also remain cautious amid concerns about the broader global economic outlook. While the US has delayed the implementation of new tariffs scheduled to begin August 1, a lack of detail on potential rate changes has left investors uneasy. Analysts fear that heightened tariffs could dampen economic activity and, in turn, weaken oil demand.

“Concerns over Trump’s tariffs continue to be the broad theme in the second half of 2025,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova. “Dollar weakness is the only support for oil for now.”