Oil prices retreated during Asian trade on Monday after the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) announced a sharper-than-anticipated production increase for August, unsettling markets already anxious over the impact of new United States tariff plans on global economic growth.
By 3:00 pm AEST (5:00 am GMT), Brent crude futures dropped $0.36, or 0.5%, to US$67.94 per barrel, while U.S. West Texas Intermediate (WTI) crude declined $0.31, or 0.5%, to $66.19 per barrel.
The Organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, revealed on Saturday that it would boost output by 548,000 barrels per day (bpd) in August.
This represents a notable step up from the 411,000 bpd monthly increases approved for May, June, and July, and a significant jump from the 138,000 bpd added in April.
In a client note, ANZ analysts said: "The group also warned that it will consider another 548kb/d hike in September at the next meeting on 3 August. This would complete the revival of the 2.2mb/d voluntary cuts, some 12 months ahead of the original schedule.
"The group said the decision was based on a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories."
The analysts added that the actual increase in supplies has so far fallen short of planned levels, with Saudi Arabia providing most of the additional barrels.
At the same time, oil markets were pressured by renewed trade tensions, as U.S. officials confirmed a delay in implementing new tariffs.
President Donald Trump said on Sunday that the U.S. is nearing finalisation of several trade deals and will begin sending letters on Monday to notify trading partners of updated tariff rates. He confirmed the new rates would take effect from August 1.
However, Trump added confusion to the outlook, stating tariffs could vary “from maybe 60% or 70% tariffs to 10% and 20%”.
Adding to the ambiguity, Trump announced on Truth Social that an extra 10% tariff would be applied to nations perceived as aligning with BRICS.
“Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy,” Trump posted on Sunday night (Monday AEST).
