Oil Gains as Geopolitical Concerns Rise, OPEC+ Boosts Supply
Oil advanced after geopolitical and trade risks increased over the weekend, and as OPEC+ increased production less than some had feared.
Brent crude for August rose as much as 2.1% to $64.09 a barrel, after losing 2.2% last week, while West Texas Intermediate was around $62
Ukraine struck air bases deep in Russia, Iran criticized a report showing its growing stockpiles of enriched uranium, and President Donald Trump said he would be increasing tariffs on steel and aluminum in the latest twist in the trade wars.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies agreed on Saturday to add 411,000 barrels a day of supply in July. The decision to match increases for May and June was in line with expectations, but confirmed reports late last week that the group was considering an even bigger volume.
Monday's move higher came after a turbulent two months that saw prices tumble to a four-year low in the wake of Trump's tariff wars, before recuperating some of those losses. Crude remains almost 15% lower this year, pressured by the simmering trade conflicts and the abandoning by OPEC+ of its former strategy of defending higher prices by curbing output.
OPEC+ officials said the quota boost reflected Saudi Arabia's desire to punish over-producing members such as Kazakhstan and Iraq. Some members — including Russia, Algeria and Oman — had wanted a pause. The group next meets on July 6 to discuss output levels for August.
“Brent should be well supported in the middle of our expected $60-$65 summer range until we get a better understanding of how quickly actual OPEC production is rising,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. in Sydney. “We may be seeing signs that the pace of increase could slow in the coming months” as some members had wanted a lull in the quota hikes.
Source: Bloomberg
