Oil prices declined as signals emerged that Saudi Arabia is pushing for another major production increase, fueling concerns of a potential crude surplus later this year. West Texas Intermediate dropped 0.9%, closing below $63 a barrel, after news that Saudi Arabia is advocating for OPEC+ to add at least 411,000 barrels per day in August—and possibly September—to capitalize on peak summer demand. Despite the market’s initial reaction, analysts noted the move was largely expected.
OPEC appears set to continue its current path of production increases, as Saudi Arabia pushes for further hikes. This news broke oil out of a stagnant trading pattern, despite mixed demand signals—U.S. crude stockpiles fell by 4.3 million barrels, while gasoline demand declined. Oil had risen earlier in the week after OPEC+ confirmed a July production boost, though Saudi Arabia’s actual increase fell short of its potential.
Meanwhile, Aramco cut oil prices to Asia for the third straight month of output hikes, though the reduction was smaller than expected.Oil prices remain roughly 12% lower this year amid concerns of an impending supply surplus. Meanwhile, traders are closely watching U.S. trade tensions, as President Donald Trump described his Chinese counterpart as “extremely difficult” to negotiate with.
