Oil Market Defies OPEC+ Output Surge, Braces for Tariff Uncertainty

On Monday, the oil market demonstrated resilience in the face of OPEC+ announcing a higher-than-expected output increase for August, as well as uncertainties surrounding U.S. tariffs. Despite opening at a loss, oil prices managed to recover, bolstered by a tight physical market.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, opted to increase production by 548,000 barrels per day in August. This figure surpassed the 411,000 bpd increases from the previous three months. Brent crude futures initially dropped, but later gained 0.6% at $68.70 a barrel, while U.S. West Texas Intermediate hovered at $67.04.

Market confidence was reflected in Saudi Arabia's decision to raise the price for its flagship Arab Light crude for Asia to a four-month high. Analysts from RBC Capital and Goldman Sachs anticipate further output announcements at the next OPEC+ meeting. However, concerns over U.S. tariffs continue to loom, potentially impacting economic activity and oil demand.

(With inputs from agencies.)