Oil Prices Drop More Than 1% After OPEC+ Agrees to Increase Production
Oil prices fell more than 1% in trading on Monday (July 6th) after OPEC+ agreed to further raise production targets starting in August. Pressure also came from the recovery of major producers' oil exports through the Strait of Hormuz, which has the potential to increase global supply.
Brent crude oil fell US$1.02, or 1.41%, to US$71.10 per barrel at 07:56 GMT. Meanwhile, West Texas Intermediate, or WTI, fell 80 cents, or 1.16%, to US$67.89 per barrel. There was no WTI price settlement on Friday because the US market was closed for the Independence Day holiday.
Oil prices have been relatively limited over the past week, following a downward trend in several weeks. Investors are still closely monitoring talks between the United States and Iran, particularly regarding the future of oil shipping routes through the Strait of Hormuz. This route is of concern because it is crucial for energy exports from the Gulf region.
OPEC+, comprising major oil-producing countries, including Russia, agreed to increase its production target by 188,000 barrels per day starting in August. This increase follows similar production increases announced for June and July. The decision signals that producers are beginning to prepare to bring more supply to the market.
However, this additional production remains largely a paper plan. The US-Israel war with Iran previously closed the Strait of Hormuz to tanker traffic from key producers such as Saudi Arabia, Kuwait, and Iraq. PVM analysts believe that OPEC+ is currently selling oil amid a declining market, so the chances of a price recovery in the near term are still limited. However, lower oil prices have the potential to boost demand in the coming period. (yds)
Source: Newsmaker.id
