Oil prices declined on Monday after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced a larger-than-anticipated production increase for August.
Brent crude oil, against which Nigerian oil is priced, dropped as much as 1.6% before recovering slightly to trade near $68 per barrel, while West Texas Intermediate (WTI) held above $66 per barrel in early trading.
The alliance, led by Saudi Arabia, agreed to raise production by 548,000 barrels per day next month, surpassing traders’ expectations of a 411,000-barrel daily increase.
The decision puts OPEC+ on course to unwind its most recent output cuts a full year ahead of schedule. Alliance delegates indicated that the additional barrels are expected to meet strong summer demand, citing steady global economic conditions and resilient market fundamentals.
“OPEC+ is clearly taking advantage of a period of tightness in global energy markets,” said Robert Rennie, Head of Commodity and Carbon Research at Westpac Banking Corp. “However, there are downside risks to oil prices as seasonal demand will inevitably taper off after summer.”
The increase comes amid mounting geopolitical and economic uncertainties. Tensions in the Middle East have eased following a fragile truce between Israel and Iran, but attention has shifted to the United States’ evolving trade policy.
U.S. President Donald Trump confirmed over the weekend that his administration will implement country-specific tariffs starting August 1, with an additional 10% levy on any country pursuing what he described as “Anti-American policies” under the BRICS framework. The new tariffs are expected to add fresh pressure on the global demand outlook.
Saudi Arabia reinforced its supply strategy by raising the official selling price for its primary crude grade bound for Asia next month, signaling confidence that the market can absorb the added barrels.
The alliance also plans to review another 548,000-barrel-per-day increase for September at its next meeting on August 3. If approved, the move would complete the phased restoration of the 2.2 million barrels per day of production cuts implemented in 2023.
OPEC+ has been accelerating its production recovery over the past four months, having previously announced hikes of 411,000 barrels per day for May, June, and July — three times faster than initially scheduled.
The latest adjustment marks a significant strategic pivot from years of output restraint to a more aggressive push to regain market share.
Market analysts caution that the group’s optimism could face headwinds if demand growth slows or if trade restrictions tighten further.
Investors will closely monitor upcoming data on global inventories and the impact of tariffs on economic activity.
At press time, Brent crude was trading at $68.05 per barrel, while WTI stood at $66.20. Traders expect continued price volatility in the coming weeks as supply increases coincide with geopolitical developments and shifting demand patterns.
