Oil prices climbed Tuesday, hovering near two-week highs as markets absorbed the impact of a larger-than-expected OPEC+ production increase and ongoing uncertainty around US trade policy.
As of mid-afternoon, Brent crude was up 89 cents at $70.47 per barrel, while US West Texas Intermediate rose 80 cents to $68.73. Both benchmarks are on track for their highest close since June 24.
OPEC+ on Saturday approved a 548,000 barrel-per-day (bpd) production hike for August, outpacing the 411,000 bpd monthly increases seen earlier this summer. The move accelerates the rollback of the group’s 2.2 million bpd in voluntary cuts and hints at a similar bump likely to be announced at the group’s next meeting on August 3.
Despite the higher output, tight middle distillate inventories and ongoing Red Sea shipping disruptions have helped keep prices supported. Analysts at Rystad Energy noted that actual physical supply remains tighter than headline production figures suggest.
US trade policy added further volatility. President Trump announced new tariffs on 14 countries, including 25 percent duties on imports from Japan and South Korea, and up to 40 percent for others. Both Japan and South Korea have said they will attempt to negotiate exemptions ahead of the August implementation. The move has raised fears of a global economic slowdown that could dampen oil demand.
Traders are also awaiting weekly US inventory data. The API and EIA are set to report Tuesday and Wednesday, respectively. Analysts expect a draw of 2.8 million barrels from crude stocks for the week ending July 4, which would be the sixth draw in seven weeks.
Looking ahead, analysts at HSBC and Commerzbank both see Brent slipping back to around $65 this fall, as seasonal demand fades and OPEC+ barrels hit the market.
By Julianne Geiger for Oilprice.com
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