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Crude oil prices inch upward in anticipation of OPEC+ meeting and tariff negotiations

Oil costs increased slightly on Tuesday, as market participants considered potential decisions from OPEC+ regarding their production policies.

Oil prices inched upward, as market participants maintaining a watchful eye on discussions between...
Oil prices inched upward, as market participants maintaining a watchful eye on discussions between OPEC+ and potential tariff negotiations.

Crude oil prices inch upward in anticipation of OPEC+ meeting and tariff negotiations

In a significant move, OPEC+ is set to implement an output hike of approximately 411,000 barrels per day (bpd) for August 2025, marking the fourth consecutive monthly increase of this size. This strategic shift by the producer group aims to defend market share against non-OPEC producers by substantially increasing supply.

The cumulative effect of this planned August increase would bring OPEC+'s total production increase in 2025 to about 1.78 million bpd, which represents more than 1.5% of global oil demand. This ongoing supply expansion follows years of significant cuts, over 5 million bpd, as the group progressively unwinds voluntary cuts and boosts output.

The anticipated output hike could lead to downward pressure on global oil prices. Currently, Brent crude is trading around $66.59/barrel, and WTI near $64.65/barrel, as of early July 2025. HSBC expects these supply hikes in August and September to increase downside risks to oil prices, potentially pushing Brent prices below the bank's previous forecast of $65/barrel by Q4 2025.

The increased supply amid a backdrop of global demand growth trailing supply could lead to oversupply conditions in the second half of 2025, exerting downward pressure on prices. Recent geopolitical tensions that had previously supported prices have subsided, removing some risk premiums and contributing to price stability or weakening.

Meanwhile, trade negotiations are at the forefront of investors' minds, with the U.S. President Donald Trump's tariff deadline of July 9 approaching. The market is concerned that OPEC+ will continue with its accelerated rate of output increases. Morgan Stanley predicts Brent futures to retrace to around $60 by early next year, given the current well-supplied market.

The 12-day war between Israel and Iran, which started on June 13, had initially pushed up Brent prices, but with the recent Israel-Iran ceasefire, geopolitical risk has abated, according to Morgan Stanley. The European Union seeks immediate relief from tariffs in key sectors as part of any trade deal with the U.S. by July 9.

Investors and market analysts will closely monitor these developments to gauge their potential impact on global oil prices and market stability.

  1. The increase in oil supply by OPEC+, as Ira follows through with the production hike in August 2025, could escalate the downside risks in the energy industry's finance sector, given the anticipated downward pressure on global oil prices.
  2. As the oil-and-gas industry faces the possibility of oversupply conditions in the second half of 2025, caused by the increased OPEC+ output, the overall risk for the industry may intensify, potentially affecting the investment landscape within the sector.
  3. HSBC and Morgan Stanley both expect the continued output hikes by OPEC+ to put a strain on the oil prices, with Morgan Stanley forecasting Brent prices to dip as low as $60 in the early part of the new year, creating a larger risk for finance organizations operating within the oil and gas industry.

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