Oil Prices Drop Ahead of OPEC+ Production Decision
World oil prices weakened for the second day in a row ahead of the important OPEC+ meeting scheduled for Saturday this weekend. What caused it? Traders are preparing for the possibility of OPEC+'s decision to increase production by another 411,000 barrels per day starting in August. Brent oil prices fell to nearly $68 per barrel, after previously falling 0.4% on Thursday.
When and where will this decision be made? The OPEC+ meeting, originally scheduled for Sunday, has been moved forward to Saturday and will be held virtually. The decision to increase supply is expected to be a response to global conditions that are currently more stable, but remain vulnerable to pressure from geopolitical and trade policy perspectives.
On the other hand, who is influencing market sentiment? US President Donald Trump has again shaken the market with threats of new tariffs that will come into effect in August if his trading partners have not reached an agreement before July 9. Trump said he would start sending official letters in the next few days, which has weakened global risk appetite, including in the oil market.
Why is the market still nervous even though prices are relatively stable? Uncertainty still surrounds the U.S.-Iran nuclear negotiations, which are set to resume next week in Oslo. In addition, the U.S. continues to pressure Iran with oil trade restrictions, adding to the strain on global energy supplies. Israel-Iran tensions and OPEC+ policies also keep market concerns high.
What else is hurting supply? In Canada, wildfires near Fort McMurray are threatening a key oil sands production region. Alberta output fell to a two-year low, along with a drop in Mexican output and a ban on exports from Venezuela. While supply pressures are rising, the market is now more focused on the OPEC+ decision and the risk of a tariff war from the U.S.
Source: (ayu-newsmaker)
