Oil prices slipped in early Asian trading on Monday as OPEC+ confirmed another substantial production increase for September, continuing its rapid unwinding of voluntary output cuts despite tepid demand growth in Asia.
Brent crude futures fell 0.46% to $69.35 a barrel, while U.S. West Texas Intermediate declined 0.45% to $67.03. Both benchmarks had already lost roughly $2 per barrel in the previous session.
The decline followed OPEC+’s announcement that it would boost production by 547,000 barrels per day (bpd) in September. This follows a similar increase for August and is part of a broader effort to restore about 2.5 million bpd of supply—approximately 2.4% of global demand—by September. The United Arab Emirates also secured a separate output hike.
The decision effectively reverses the bloc’s largest round of voluntary cuts ahead of schedule. OPEC+ leaders cited a “healthy global economy” and “low inventory levels” as reasons for confidence that the market can absorb the extra barrels. However, recent data suggests Asia’s crude demand has been soft: regional imports fell to 25.0 million bpd in July from 27.88 million bpd in June, the lowest level since July 2024.
China, the world’s top crude importer, has been increasing purchases—but much of that appears tied to opportunistic buying when prices were lower earlier this summer, alongside rapid stockpiling.
Analysts note that much of the actual production growth since April has come from Saudi Arabia and the UAE, with other OPEC+ members struggling to meet their targets. RBC Capital Markets’ Helima Croft said the strategy has favored producers with spare capacity, as prices have held steady compared to early-year lows despite rising supply.
The timing of OPEC+’s output restoration has been partly aided by heightened geopolitical uncertainty. The brief Israel-Iran conflict in June halted a months-long price slide, sending Brent to a six-month high of $81.40 before easing back.
More recently, threats from U.S. President Donald Trump to impose broad sanctions on Russian oil buyers have injected further risk into the market. India, which sources around 40% of its crude from Russia, would face significant disruption if forced to pivot to other suppliers, potentially tightening global supply in the short term.
While Russia has previously circumvented sanctions via alternative trading networks, such adjustments would take time, and OPEC+ is capitalizing on the current uncertainty to rebuild market share.
The group’s aggressive production strategy could maintain stability if geopolitical risks keep the market tight. However, a slowdown in global trade from Trump’s escalating tariff measures—or continued weakness in Asian demand—could undermine prices in the months ahead.
Oil markets appear finely balanced currently, but the risk of oversupply in the near future is hard to ignore.
By Charles Kennedy for Oilprice.com
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