US-Iran war: Oil prices edged lower on Monday after OPEC+ agreed to raise its production targets further from August. The recovery in crude exports from major producers through the Strait of Hormuz also pointed to an increase in global supply, weighing on prices.
Brent crude futures slipped 24 cents, or 0.33%, to $71.88 a barrel, after ending 0.45% higher on Friday. Meanwhile, US West Texas Intermediate (WTI) crude fell 11 cents, or 0.16%, to $68.58 a barrel. WTI did not settle on Friday as US markets remained closed ahead of the Independence Day holiday on Saturday.
What’s weighing on crude oil prices?
Both benchmark crude contracts were little changed last week after witnessing declines over the previous few weeks, as investors closely monitored talks between the United States and Iran over the future of shipping through the Strait of Hormuz while also tracking the recovery in Gulf oil exports.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, agreed on Sunday to raise production targets by another 188,000 barrels per day from August, following similar increases announced for June and July.
However, much of the planned production increase has remained on paper. The US-Israeli conflict involving Iran disrupted tanker traffic through the Strait of Hormuz, affecting key OPEC producers such as Saudi Arabia, Kuwait and Iraq, and limiting their ability to raise output.
According to a Reuters survey, OPEC’s oil production in June increased by 3.3 million barrels per day compared with the previous month to 19.43 million barrels per day, rebounding from its lowest level in more than two decades.
Meanwhile, data indicated that Gulf oil exports rose by over 3 million barrels from May to surpass 10 million bpd in June, although volumes remained about 40% below pre-war levels.
Separately, sources were quoted as saying by Reuters that crude shipments from Russia’s western ports climbed to a record high in June and are expected to remain at similar levels in July. The increase comes after drone attacks by Ukraine damaged Russian refineries, prompting Moscow to ramp up crude exports.
(With inputs from agencies)
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
