Crude oil prices declined in early Asian trading on Monday, as cooling tensions in the Middle East and anticipation of increased output from OPEC+ weighed on market sentiment.
By 21:44 ET, Brent crude futures for August delivery slipped 0.8% to $67.20 per barrel, while West Texas Intermediate (WTI) dropped 1.1% to $64.77. Despite the recent pullback, both benchmarks remain on track to end June with gains of over 5%, largely due to earlier supply concerns stemming from the Israel-Iran conflict.
Middle East Ceasefire Lowers Risk Premium
After a sharp rally last week, oil prices eased as markets reacted to signs of a sustained ceasefire between Israel and Iran, reducing the perceived threat to regional oil flows. The 12-day confrontation had lifted crude prices near yearly highs amid fears of a broader escalation following military strikes on Iranian nuclear facilities by Israel and the U.S.
Diplomatic efforts led by U.S. President Donald Trump appear to have stabilized the situation for now, with discussions over Iran’s nuclear program potentially resuming. This development also reduced concerns about disruptions in the Strait of Hormuz, a crucial chokepoint for global oil shipments.
OPEC+ Eyes Further Production Increase
Attention is now focused on the upcoming OPEC+ meeting scheduled for July 6, where the alliance is expected to greenlight another monthly production increase of around 411,000 barrels per day for August. The move would continue the group’s strategy of gradually restoring output after years of supply curbs aimed at stabilizing prices.
OPEC+ began phasing out its pandemic-era production limits earlier this year and has since committed to measured increases to balance supply with improving demand while maintaining internal discipline among members.
China’s Mixed Economic Data Adds Uncertainty
Meanwhile, fresh economic data from China offered mixed signals for oil demand. The June manufacturing Purchasing Managers’ Index indicated continued contraction, suggesting only tepid industrial activity and modest energy consumption in the world’s second-largest economy.
U.S. Summer Demand in Focus
Outside the OPEC+ framework, analysts are closely monitoring fuel consumption trends in the United States, where the summer travel season is expected to boost gasoline demand. However, whether this increase in consumption will be sufficient to offset rising supply remains uncertain.