Image credit: Getty Images
Oil prices fell on Monday as an easing of geopolitical risks in the Middle East and the prospect of another OPEC+ output hike in August improved supply expectations amid persistent uncertainty over the outlook for global demand.
Brent crude futures LCOc1 fell 13 cents, or 0.19 per cent, to $67.64 a barrel by 0344 GMT, ahead of the August contract’s expiry later on Monday. The more active September contract LCOc2 was at $66.62, down 18 cents.
Read-Saudi Arabia ready for multiple oil price scenarios, economy minister says
US West Texas Intermediate crude CLc1 dropped 32 cents, or 0.49 per cent, to $65.2 a barrel.
Last week, both benchmarks posted their biggest weekly decline since March 2023, but they are set to finish higher in June with a second consecutive monthly gain of more than 5 per cent.
A 12-day war that started with Israel targeting Iran’s nuclear facilities on June 13 pushed up Brent prices, which surged above $80 a barrel and then slumped to $67 after President Donald Trump announced an Iran-Israel ceasefire.
The market has stripped out most of the geopolitical risk premium built into the price following the Iran-Israel ceasefire, IG markets analyst Tony Sycamore said in a note.
Further weighing on the market, four delegates from OPEC+, which includes allies of the Organization of the Petroleum Exporting Countries, said the group was set to boost production by 411,000 barrels per day in August, following similar-sized output increases for May, June and July.
OPEC+ is set to meet on July 6 and this would be the fifth monthly increase since the group started unwinding production cuts in April.
However, bearish pressure from concerns over slower global oil demand, particularly from China, is likely to persist.
Uncertainty around global growth continues to cap prices, said Priyanka Sachdeva, senior market analyst at Phillip Nova.
China’s factory activity contracted for a third straight month in June, as weak domestic demand and faltering exports weighed on manufacturers amid US trade uncertainty.
In the US, the number of operating oil rigs, an indicator of future output, fell by six to 432 last week, the lowest level since October 2021, Baker Hughes said.
