Crude oil prices dropped at the start of the week as markets prepared for another supply increase from the OPEC+ alliance. The recent ceasefire between Israel and Iran also erased much of the geopolitical risk premium that had supported prices in recent months.
Brent crude opened Monday at $67.63 per barrel, while West Texas Intermediate (WTI) traded at $65.23. These declines followed reports that OPEC+ may add 411,000 barrels per day to global supply next month. If approved, this would raise the total increase for the year to 1.78 million barrels per day.
Reuters reported that the group is likely to maintain its plan for August production growth. Some sources even suggested the group could approve a larger hike. OPEC+ will meet this Sunday to finalize its decision.
Richard Bronze, analyst at Energy Aspects, said the group still appears committed to moving ahead with the planned increase. “We do think the group is most likely to still go ahead with the August accelerated unwinding,” he told Reuters.
Weak Chinese Manufacturing Adds to Bearish Outlook
Oil markets also responded to the release of soft economic data from China. The latest Purchasing Managers’ Index (PMI) rose slightly to 49.7 in June from 49.5 in May. However, the figure remains below the 50 threshold, which signals contraction. This marks the third straight month of sub-50 readings, suggesting manufacturing activity remains under pressure.
Analysts noted some reasons for cautious optimism. Xu Tianchen from the Economist Intelligence Unit said two consecutive months of improvement were a positive sign. He pointed out that June was the first full month without the tariffs imposed during the Trump administration, which could help industrial recovery.
U.S. Rig Count Declines Despite Higher Global Supply
While OPEC+ prepares to increase supply, U.S. oil production continues to ease. Last week, the number of active oil rigs fell by six. Gas rigs declined by two. The total number of active rigs is now 34 lower than it was a year ago, with oil rigs alone down by 47.
This drop in U.S. drilling activity suggests that domestic producers remain cautious, even as international producers prepare to ramp up. The contrasting trends between OPEC+ supply growth and U.S. drilling slowdown could shape oil market dynamics in the months ahead.
