Oil Prices Retreat as OPEC+ Expands Production and Global Supply Outlook Improves

OPEC+ Decision Weighs on Crude

Oil prices moved more than 1% lower on Monday after OPEC+ approved another increase in production quotas from August, while improving export flows through the Strait of Hormuz reinforced expectations of rising global crude supplies.

Brent crude fell $1.02, or 1.41%, to $71.10 a barrel by 07:56 GMT after posting a modest gain on Friday. U.S. West Texas Intermediate (WTI) crude declined 80 cents, or 1.16%, to $67.89 a barrel. WTI did not settle on Friday because U.S. markets were closed for the Independence Day holiday.

Rising Output Adds Pressure

Oil prices had remained broadly stable last week after several weeks of declines as traders monitored diplomatic developments between the United States and Iran and assessed the recovery of oil exports from the Gulf region.

On Sunday, OPEC+ members, including Russia, agreed to raise collective production targets by an additional 188,000 barrels per day beginning in August, extending similar increases implemented in June and July.

Although conflict involving Iran had previously disrupted tanker traffic through the Strait of Hormuz, improving shipping conditions are now expected to allow more of the planned production to reach international markets.

Analysts See Weak Pricing Environment

PVM analysts said producers are continuing to increase supply despite weaker market conditions.

“They are selling into a falling market, offering little hope of an imminent price recovery,” the firm said.

It added, “However, lower oil prices will undoubtedly stimulate demand further down the line.”

Data showed Gulf crude exports climbed by more than three million barrels per day in June compared with May, surpassing 10 million barrels daily, although shipments remain around 40% below levels recorded before the conflict.

Demand Forecasts Revised Lower

ANZ now expects global oil demand to contract by 1.5 million barrels per day in 2026 after a sharper-than-anticipated slowdown during the second quarter.

The bank said, “We now expect global oil demand to contract by 1.5 million barrels per day in 2026, reflecting a sharper-than-expected downturn in Q2, when year-on-year declines could reach 4 million bpd based on preliminary data.”

It added, “However, we expect demand losses to moderate in the second half of the year as supply improves and some deferred consumption returns.”

Elsewhere, Abu Dhabi National Oil Company sold around 16 million barrels of crude through its latest spot tender at wider discounts, highlighting increased spot market availability.

Meanwhile, exports from Russia’s western ports reached record levels in June and are expected to remain elevated in July as refinery disruptions continue to redirect crude toward export markets.