Oil prices dropped on Tuesday to their lowest point in three weeks, returning to levels last seen before the recent conflict between Israel and Iran. This decline is driven by easing worries over supply disruptions and anticipation of an upcoming production increase from OPEC and its allies.
Brent crude for September delivery dipped 0.3% to $66.57 per barrel, while West Texas Intermediate futures also fell 0.3%, settling at $63.64 per barrel as of 9:17 PM ET. Brent prices hit their lowest mark since June 11, just prior to the outbreak of hostilities in the Middle East.
A ceasefire agreement between Israel and Iran appears to be holding, helping to ease tension in the oil markets.
Investor attention is now focused on the Organization of the Petroleum Exporting Countries and its partners, collectively known as OPEC+, who are expected to convene later this week. The group is widely anticipated to continue its gradual rollback of production cuts that have been in place for two years.
Recent reports suggest that OPEC+ plans to boost output by approximately 411,000 barrels per day in August, following similar incremental increases in May, June, and July. This would bring the total increase for 2025 to around 1.78 million barrels per day. However, this production boost remains smaller than the volume cut by the alliance during the past two years.
The expected increase signals a shift towards raising supplies in response to sustained pressure from weaker oil prices. Leading producers within OPEC+, including Saudi Arabia and Russia, are also keen on maintaining discipline within the group to prevent excessive production that could further depress prices.
Meanwhile, market jitters persist over US trade policies, with the looming July 9 deadline set by President Donald Trump to secure new trade agreements. On Monday, Trump criticized Japan over its rice import policies and suggested that trade negotiations with Tokyo might be terminated.
US Treasury Secretary Scott Bessent also warned that, despite ongoing talks, some countries—including Japan and India—could face tariffs exceeding 20%. This has raised concerns that escalating trade tensions could dampen global economic growth and, consequently, reduce demand for oil.
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