FX.co ★ Oil Drops Amid Oversupply Concerns

On Tuesday, West Texas Intermediate (WTI) crude oil futures dipped to approximately $64.9 per barrel, marking the second consecutive day of decline. This downturn comes amid concerns over a potential surplus in oil supply, as OPEC+ considers increasing production. The group reportedly plans to boost output by 411,000 barrels per day (bpd) in August, mirroring similar increases implemented in May, June, and July. Should these plans proceed, OPEC+ will have augmented total supply by 1.78 million bpd thus far this year, equivalent to more than 1.5% of global demand. This strategic move is perceived as a measure to discipline members who have exceeded production quotas and a tactical approach by Saudi Arabia, the leading figure of the group, to regain market share lost to U.S. shale producers and other competitors. Additionally, the decline in prices has been influenced by the diminishing geopolitical risk premium due to the enduring ceasefire between Israel and Iran. Furthermore, sluggish manufacturing activity in China, the world's largest oil importer, has fueled apprehensions regarding a possible slowdown in demand.