Oil falls after OPEC+ agrees to raise output targets
By Anushree Mukherjee
July 6 (Reuters) – Oil prices fell on Monday after OPEC+ agreed to further raise production targets from August and exports from key producers via the Strait of Hormuz rebounded, potentially adding to global supply.
Brent crude futures fell 47 cents, or 0.65%, to $71.65 a barrel at 12:27 a.m. ET, after rising 0.45% on Friday. U.S. West Texas Intermediate crude oil was down 50 cents, or 0.73%, at $68.19 a barrel. No settlement was reached for WTI on Friday as US markets were closed ahead of the Independence Day holiday on Saturday.
Both contracts were little changed last week after mostly falling over the past few weeks, as investors closely followed talks between the United States and Iran over the fate of shipping through the Strait of Hormuz and a recovery in Gulf oil exports.
“The downward movement is still influenced by previously stranded tankers managing to exit the Gulf, resulting in an increase in oil in the water,” UBS analyst Giovanni Staunovo said. he said.
The Organization of Petroleum Exporting Countries and its allies, including Russia, agreed on Sunday to raise production targets by another 188,000 barrels per day starting in August, on top of similar increases in June and July.
But the increase remained largely on paper due to the US-Israeli war against Iran, which closed the strait to tanker traffic and limited production for key OPEC producers including Saudi Arabia, Kuwait and Iraq.
“They are selling in a falling market and offer little hope that prices will recover anytime soon,” PVM analyst Tamas Varga said. “However, lower oil prices will undoubtedly increase demand further.”
The United Arab Emirates increased its crude production to near-record levels above 3.8 million barrels per day in June after leaving OPEC to avoid production limits, two sources familiar with production data said on Monday.
Meanwhile, Saudi Arabia set the official sales price for August Arab Light crude to Asia at $1.50 per barrel below the Oman/Dubai average, lower than the previous month, according to a pricing document reviewed by Reuters.
Meanwhile, ANZ Bank said in a note: “We expect global oil demand to contract by 1.5 million barrels per day in 2026, reflecting a sharper decline than expected in the second quarter, when annual declines could reach 4 million barrels per day, according to preliminary data.”
“However, we expect demand losses to moderate in the second half of the year due to improved supply and some deferred consumption returns,” the bank said.
Ukraine’s military said on Monday that Russia hit oil refineries in the Yaroslavl and Leningrad regions overnight.
(Reporting by Florence Tan and Helen Clark; Anushree Mukherjee in Bengaluru; Editing by Thomas Derpinghaus, Joe Bavier, Emelia Sithole-Matarise and Louise Heavens)
