Oil prices edged lower on Monday after Opec+ agreed to raise its production targets for August, while crude exports through the Strait of Hormuz continued recovering following recent regional tensions, increasing expectations of higher global supply.
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Brent crude futures fell 24 cents, or 0.33%, to $71.88 per barrel in early trading, while US West Texas Intermediate (WTI) crude slipped 11 cents, or 0.16%, to $68.58 per barrel. WTI did not settle on Friday because US markets were closed ahead of the Independence Day holiday.
The market reaction followed Sunday’s decision by the Organisation of the Petroleum Exporting Countries (Opec) and its allies, collectively known as Opec+, to increase August production targets by 188,000 barrels per day. The move follows similar output increases announced for June and July as the group continues its gradual supply restoration strategy.
Despite the latest decision, analysts said the additional production has so far had a limited impact because supplies from several Gulf producers were disrupted during the recent US-Israel conflict with Iran, which temporarily affected tanker traffic through the Strait of Hormuz. Saudi Arabia, Kuwait and Iraq were among the countries impacted by the disruption.
IG market analyst Tony Sycamore said the latest output increase was broadly in line with market expectations, adding that production quotas may still not be fully met as producers continue ramping up operations after the conflict.
According to a Reuters survey, Opec’s oil output increased by 3.3 million barrels per day in June to reach 19.43 million barrels per day, marking a strong recovery from its lowest level in more than two decades.
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Meanwhile, Gulf oil exports rose by more than 3 million barrels per day in June compared with May, exceeding 10 million barrels per day. However, exports remained around 40% below pre-conflict levels. Russia also maintained high crude exports from its western ports, supported by refinery disruptions caused by Ukrainian drone attacks.