Oil Drops as Larger OPEC Supply Increase Raises Glut Concerns
Brent slid as much as 1.6% toward $67 a barrel after falling 0.7% on Friday, and West Texas Intermediate was near $66. The group led by Saudi Arabia decided on Saturday to increase supply by 548,000 barrels a day, putting OPEC on track to unwind its most recent output cuts a year earlier than planned.
Alliance officials cited summer demand as one reason for their optimism that the extra barrels could be absorbed by the market, with the move answering President Donald Trump's calls for lower fuel costs.
The oil market has been volatile in recent weeks following the conflict between Israel and Iran, with a fragile truce now in place and focus shifting to OPEC supply and US trade policy. Trump's country-by-country tariffs will take effect Aug. 1, Commerce Secretary Howard Lutnick said, signaling some breathing room for trading partners ahead of a previous deadline of July 9.
OPEC previously announced hikes of 411,000 barrels a day for May, June and July — already three times faster than scheduled — and traders had expected the same amount for August. The increase amplifies a dramatic strategy pivot, from years of output restraint to reopening the taps to reclaim market share.
The boost was based on 'a steady global economic outlook and current healthy market fundamentals,' the group said in a statement on Saturday. Saudi Arabia followed with a price increase to its main crude grade for Asia next month, signaling confidence the market can withstand the extra OPEC supplies.
The alliance will consider adding another roughly 548,000 barrels a day in September at the next meeting on Aug. 3, according to delegates who asked not to be identified, which would complete the revival of 2.2 million barrels a day of supply shuttered in 2023.
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