Oil Futures Slip as Market Awaits OPEC+ Meeting, Potential Output Increase

The oil market showed a slight decline on Friday due to the U.S. Independence Day holiday, but prices are expected to rise again in response to this weekend's OPEC+ meeting and potential output increase.

OPEC+ Countries Prepare for Another Oil Output Hike

Eight OPEC+ countries are likely to make another oil output increase for August at a meeting on Saturday, which was moved forward a day from its original schedule. This would be the fourth successive month of increased production, with an estimated additional 411,000 barrels per day (bpd) being added to global supplies.

According to PVM analyst Tamas Varga, if OPEC+ decides to raise output as expected, oil balance estimates for the second half of the year will need to be reassessed. This could lead to accelerated swelling in global oil reserves, which may have a significant impact on the market.

Market Uncertainty and Profit-Taking

Phil Flynn, senior analyst with the Price Futures group, believes that there is some profit-taking going on in the market due to concerns about OPEC's production increase. Investors seem to be waiting for OPEC's decision while also keeping an eye on other factors such as U.S. President Donald Trump's massive package of tax and spending cuts.

Flynn noted that investors are in a wait-and-see mode, ready to react to OPEC's move and assess its implications. The market is also being affected by the uncertainty surrounding U.S. tariff policy, which has been in the spotlight due to the approaching end of a 90-day pause on higher levies.

Iran Nuclear Talks and EU Tariff Negotiations

The resumption of nuclear talks between the United States and Iran next week may have some impact on crude prices. Iranian foreign minister Abbas Araqchi reiterated Tehran's commitment to the nuclear Non-Proliferation Treaty, but it remains to be seen how this will affect global oil supplies.

Meanwhile, European Union negotiators are struggling to achieve a breakthrough in trade negotiations with the Trump administration. The EU may now seek to extend the status quo to avoid tariff hikes, according to six diplomats briefed on the talks.

Improved Demand Outlook Boosts Oil Price Forecast

Barclays has raised its Brent oil price forecast by $6 to $72 a barrel for 2025 and by $10 to $70 a barrel for 2026 due to an improved demand outlook. This suggests that investors are becoming increasingly optimistic about the future of global oil supplies.

Market Reaction and Implications

The market is expected to react positively to OPEC+'s decision on Saturday, with prices potentially rising in response to increased production. However, the uncertainty surrounding U.S. tariff policy and the impact of Iranian nuclear talks on global oil supplies remain significant concerns for investors.

As the market continues to navigate these challenges, it will be interesting to see how investors respond to OPEC+'s decision and whether their expectations about demand and supply are realized in the coming months.

Conclusion

The oil market has shown a slight decline due to the U.S. Independence Day holiday, but prices are expected to rise again in response to this weekend's OPEC+ meeting and potential output increase. As investors await OPEC+'s decision, they will also be keeping an eye on other factors such as U.S. tariff policy and Iranian nuclear talks.

While some analysts believe that there is some profit-taking going on in the market due to concerns about OPEC's production increase, others see this as a short-term adjustment before prices rebound in response to increased supply. The uncertainty surrounding global oil supplies remains significant, but one thing is clear: the market will be closely watching OPEC+'s decision and its implications for demand and supply in the coming months.

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