Global oil markets experienced a notable downturn this week, marking their first weekly decline in three, primarily driven by growing anticipation of increased crude supply. The bearish sentiment emerged as a key group of oil-producing nations weighs options for boosting output in the near future, overshadowing other market concerns.
OPEC+ Supply Dynamics
Market trends have been heavily influenced by speculation surrounding the upcoming OPEC+ meeting, where the alliance is reportedly considering a substantial production increase for July. A potential addition of 411,000 barrels per day (bpd) is among the options, though no final agreement has been reached. This proposed increase follows OPEC+’s prior commitments to boost output by nearly one million bpd spread across April, May, and June.
Analysts largely expect this increase to proceed, contributing to higher inventory levels.
Market Performance and Contributing Factors
Both Brent and U.S. West Texas Intermediate (WTI) crude benchmarks experienced their fourth consecutive daily decline, hitting over one-week lows. Brent hovered around $63.96 and WTI near $60.72, leading to weekly declines of roughly 2.3% and 2.9% respectively, ending a two-week period of gains.
The potential supply hikes were compounded by surging U.S. crude oil storage demand, reaching levels last seen during the pandemic. While initial market jitters arose from geopolitical tensions like Israeli reports on Iranian nuclear facilities and new EU/UK sanctions on Russian oil, these were largely overshadowed by the dominant concern of increased supply.
Key Outlooks and Negotiations
Beyond OPEC+’s immediate decisions, market participants are also monitoring the forthcoming U.S. oil and gas rig count data from Baker Hughes, offering insights into future domestic supply. Ongoing U.S.-Iranian nuclear negotiations, now in their fifth round in Rome, could significantly impact global supply if they lead to Iranian oil re-entering the market.
Sophia Patel brings deep expertise in portfolio management and risk assessment. With a Master’s in Finance, she writes practical guides and in-depth analyses to help investors build and protect their wealth.