Brent oil rose to $70/b despite oversupply concerns

Both Brent and WTI crude oil prices traded near weekly highs of $70/b and $67/b, respectively, despite oversupply concerns triggered by the July 6 OPEC+ production hike, and a stronger US Dollar.

The increase in August Saudi official selling prices and the escalated attacks on vessels passing through the Red Sea by the Houthis in Yemen provided support to the oil prices on early Monday after the initial drop following a larger-than-expected OPEC+ supply hike.

The Saudi Arabia increased its official selling price (OSP) for August crude oil loadings by $1/bbl MoM to $2.20/bbl over the benchmark.

(Source: arabnews.com)

Energy traders added a small geopolitical risk premium on oil prices as they concerned that further attacks by Houthis could see an increase once again in vessels avoiding the Red Sea, taking a longer route around the Cape of Good Hope.

Traders shrugged off OPEC+ supply increase

Brent oil initially fell as low as $67/b on Sunday’s opening bell after OPEC+ agreed on a larger-than-expected supply hike of 548k bpd for August, more than the 411k bpd increase they made for the prior three months. (Source: reuters.com)

The latest production hike decision took total announced OPEC+ supply increases to more than 1.9 million bpd, and it has restored nearly all the 2.2 million-bpd of voluntary cuts made by the group since 2023.

Adding to the above, OPEC+ is also expected to approve an increase (the final) of about 550,000 bpd for September when it meets on August 3.

However, energy traders shrugged off OPEC+ supply increase, as the actual output hike has been smaller than the announced levels so far and most of the supply has been from Saudi Arabia.