By Giulia Petroni

Oil prices slipped after the Organization of the Petroleum Exporting Countries and its allies agreed to a larger-than-expected production hike for the fourth straight month, fueling concerns about a global supply glut at a time when the demand outlook looks uncertain.

Eight OPEC+ countries said they will increase production by 548,000 barrels a day in August--the equivalent of four monthly increments and above the 411,000 barrels a day forecast by analysts.

In early European trade on Monday, Brent crude was down 0.1% to $68.29 a barrel, while West Texas Intermediate fell 0.6% to $66.58 a barrel. The benchmarks had fallen 0.4% and 1.4%, respectively, earlier in the session.

"Saturday's announcement to accelerate supply hikes suggests that the strategic shift to normalizing spare capacity and market share, supporting internal cohesion, and disciplining U.S. shale supply is continuing," analysts at Goldman Sachs said. "Second, demand appears resilient."

The U.S. bank said it expects the group to announce a final increase of 550,000 barrels a day for September at their next meeting on Aug. 3.

Physical oil markets remain tight, suggesting the market can still absorb additional barrels as seasonal demand increases, UBS strategist Giovanni Staunovo said. However, rising risks such as trade tensions could put pressure on prices over the next six to 12 months.

Actual increases have lagged behind quotas in previous months: April's 138,000 barrels-a-day rise resulted in only 16,000 barrels a day of real output by the eight OPEC+ countries, while May's 411,000 barrels-a-day quota translated into just 154,000 barrels a day, according to UBS.

"We expect this trend to continue--real barrels hitting the market will be a fraction of the quota increase," Staunovo said.

Meanwhile, Saudi Arabia--OPEC's de facto leader--raised the August price of its flagship Arab Light crude for Asian buyers by $1 a barrel, a sign that Riyadh is confident in the demand outlook.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

July 07, 2025 04:00 ET (08:00 GMT)

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