Oil steadies as market weighs OPEC+ supply hike
Oil prices steadied on Tuesday after sliding earlier in the session, with the market weighing expectations of an OPEC+ output hike in August in an upcoming meeting.
Brent crude rose 10 cents, or 0.2%, to $66.84 a barrel by 0635 GMT, while U.S. West Texas Intermediate crude inched up 9 cents, or 0.1%, to $65.20 a barrel.
"The market is now concerned that the OPEC+ alliance will continue with its accelerated rate of output increases," ANZ senior commodity strategist Daniel Hynes said in a note.
Four OPEC+ sources told Reuters last week that the group plans to raise output by 411,000 barrels per day in August, following similar hikes in May, June, and July.
If approved, this would bring OPEC+'s total supply increase for the year to 1.78 million bpd, equivalent to more than 1.5% of global oil demand. OPEC and its allies including Russia, together known as OPEC+, will meet on July 6.
"These larger supply increases should leave the global oil market well supplied for the remainder of the year," ING commodities strategists said.
"Expectations for a comfortable oil balance, along with a large amount of OPEC spare production capacity, appear to be comforting the market," ING added.
Uncertainty about U.S. tariffs and their impact on global growth also kept a lid on oil prices.
U.S. Treasury Secretary Scott Bessent warned that countries could be notified of sharply higher tariffs, opens new tab despite good-faith negotiations as a July 9 deadline approaches, when tariff rates are scheduled to revert from a temporary 10% level to President Donald Trump's suspended rates of 11% to 50% announced on April 2.
Morgan Stanley expects Brent futures to retrace to around $60 by early next year, with the market being well supplied and geopolitical risk abating following the Israel-Iran de-escalation. It expects an oversupply of 1.3 million bpd in 2026.
A 12-day war that started with Israel targeting Iran's nuclear facilities on June 13 pushed up Brent prices. They surged above $80 a barrel after the U.S. bombed Iran's nuclear facilities and then slumped to $67 after Trump announced an Iran-Israel ceasefire.
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