Global oil markets started the week on weaker footing after OPEC+ approved another production increase for August, reinforcing expectations that additional supply will enter the market as exports gradually recover from recent geopolitical disruptions. The decision comes as shipping activity through the Strait of Hormuz continues to normalize following months of conflict, while producers across the Gulf and Russia expand exports. Together, these developments have shifted investor attention away from supply shortages and toward the possibility of a more balanced—or even oversupplied—oil market.

OPEC+ Expands Output While Supply Continues to Recover

Brent crude futures fell more than 1.4% to approximately $71.10 per barrel, while U.S. West Texas Intermediate crude declined about 1.2% to $67.89 per barrel after OPEC+ announced an additional production target increase of 188,000 barrels per day beginning in August. The increase follows similar production adjustments implemented for June and July as the producer alliance gradually restores output.

Although previous production increases were partially offset by disruptions caused by the U.S.-Israeli conflict with Iran, which temporarily restricted tanker traffic through the Strait of Hormuz, improving shipping conditions are now allowing more crude to reach international markets. As exports normalize, traders are increasingly pricing in stronger global supply growth.

Growing Exports Weigh on Market Sentiment

Recent export data highlights the changing supply picture. Gulf oil shipments increased by more than 3 million barrels per day during June compared with May, surpassing 10 million barrels per day, although volumes remain well below pre-conflict levels. Meanwhile, Abu Dhabi National Oil Company has continued selling significant quantities of crude through multiple spot tenders, reflecting greater availability in regional markets.

Russia has also contributed to growing supplies, with exports from its western ports reaching record levels during June. Damage to domestic refining infrastructure caused by Ukrainian drone attacks has redirected additional crude toward export markets, further increasing available global supply.

Demand Outlook Remains Mixed Despite Lower Prices

While expanding production has pressured crude prices, demand expectations remain uncertain. ANZ now forecasts global oil demand will contract by approximately 1.5 million barrels per day in 2026, citing weaker-than-expected economic activity during the second quarter. However, the bank expects demand losses to moderate later in the year as improved supply conditions encourage deferred consumption and lower energy costs support economic activity.

Market participants continue monitoring diplomatic negotiations between the United States and Iran, as any lasting agreement regarding shipping through the Strait of Hormuz could further stabilize exports and reduce geopolitical risk premiums embedded in oil prices. At the same time, analysts note that prolonged price weakness could eventually stimulate stronger consumption across major importing nations.

Looking ahead, the balance between recovering supply and uncertain demand will likely remain the dominant driver of crude markets. OPEC+’s willingness to continue restoring production, alongside increasing exports from Gulf producers and Russia, suggests that supply conditions are steadily improving. However, investors will closely watch economic indicators, shipping activity through the Strait of Hormuz, and global consumption trends to determine whether lower prices can successfully revive demand or whether additional downside pressure may emerge in the months ahead.