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LONDON: Oil prices were slightly higher on Tuesday as investors assessed expectations that OPEC+ will announce an output hike for August at an upcoming meeting, while also keeping an eye on negotiations between the US and its trading partners.
Brent crude was up 28 cents, or 0.4 percent, to $67.03 a barrel at 3:28 Saudi time, while US West Texas Intermediate crude was up 35 cents, or around 6 percent, to $65.46 a barrel.
The market’s main focus is the 411,000-barrel-per-day production hike that OPEC+ is expected to announce for August in a July 6 meeting, said Saxo Bank analyst Ole Hansen, adding that its impact was partially offset by potential trade deals improving the demand outlook.
“The market is now concerned that the OPEC+ alliance will continue with its accelerated rate of output increases,” Daniel Hynes, ANZ’s senior commodity strategist, said in a note.
Four OPEC+ sources told Reuters last week that the group, comprising the members of the Organization of Petroleum Exporting Countries and allies including Russia, plans to raise output by 411,000 bpd next month, following similar hikes in May, June, and July.
If approved, this hike would bring OPEC+’s total supply increase for the year to 1.78 million bpd, equivalent to more than 1.5 percent of global oil demand.
Also supporting oil prices was a weaker US dollar, which was making commodities cheaper in non-US dollar-consuming countries, UBS analyst Giovanni Staunovo said.
Investors are also watching trade negotiations ahead of US President Donald Trump’s tariff deadline of July 9. US Treasury Secretary Scott Bessent warned that countries could be notified of sharply higher tariffs despite good-faith negotiations as that deadline approaches, when tariff rates are scheduled to revert from a temporary 10 percent level to the ones Trump announced on April 2 and then suspended.
The European Union wants immediate relief from tariffs in key sectors as part of any trade deal with the US due by the July 9 deadline, EU diplomats told Reuters.
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 deescalation of the Israel-Iran conflict. 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 US bombed Iran’s nuclear facilities and then slumped to $67 after Trump announced an Iran-Israel ceasefire.