Oil Prices Fall on Eased Middle East Tensions, OPEC+ Plans August Supply Hike

Oil prices fell sharply following their biggest weekly loss in over two years as easing geopolitical tensions between Iran and Israel reduced the risk premium previously built into the market. President Donald Trump brokered a ceasefire between the two nations, although Iran remains skeptical about its durability, and Trump has indicated he might support sanctions relief if peace holds. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are expected to increase production by 411,000 barrels per day in August, marking the fourth consecutive monthly supply hike, which has intensified concerns about a supply glut later this year. This anticipated output boost, combined with a decrease in U.S. oil rig counts to the lowest level since October 2021, has shifted market focus back to supply and demand fundamentals rather than geopolitical risks. Despite the recent declines, Brent and West Texas Intermediate crude are still on track for their second consecutive monthly gain of over 5% in June. Analysts emphasize that the market is now primarily driven by underlying fundamentals, with attention turning to summer demand indicators and upcoming OPEC+ meetings.