Oil prices closed slightly higher on Friday after dipping into negative territory midday on reports that OPEC+ plans to increase production in August. Despite the mild recovery, crude posted its steepest weekly loss since March 2023, sliding nearly 12%.
Brent and WTI End Slightly Higher Amid OPEC+ Output Plans
Brent crude settled at $67.77 a barrel, a marginal increase of 4 cents or 0.1%. U.S. West Texas Intermediate (WTI) rose 28 cents or 0.4%, closing at $65.52 a barrel. According to four OPEC+ delegates, the alliance intends to raise production by 411,000 barrels per day in August—matching the increase already scheduled for July.
“The report about an OPEC increase came out and prices cratered,” said Phil Flynn, Senior Market Analyst at Price Futures Group, referring to the sharp midday price dip.
Ceasefire Between Israel and Iran Weighs on Oil Market
The 12% weekly loss followed the ceasefire announcement between Israel and Iran. During the brief conflict that began on June 13 after Israel’s strike on Iranian nuclear facilities, Brent surged past $80 per barrel but dropped after U.S. President Donald Trump brokered peace, leading markets to discount geopolitical risk.
Rystad analyst Janiv Shah noted, “The market has almost entirely shrugged off the geopolitical risk premiums from almost a week ago as we return to a fundamentals-driven market.”
Demand Outlook and Inventory Draws Support Prices
Flynn added that anticipation of increased demand in the coming months contributed to Friday’s price support: “We’re getting a demand premium on oil.”
Additionally, oil prices received support from multiple inventory reports. U.S. government data showed a drop in crude oil and fuel inventories last week, alongside increased refining activity. Analysts also pointed to falling middle distillate stocks in the ARA region and Singapore, with Singapore’s net exports rising week over week.
China, the world’s largest crude importer, significantly increased its Iranian oil purchases in June, with imports averaging more than 1.8 million barrels per day between June 1-20. This is a record high, according to Vortexa, and reflects pre-conflict stockpiling and strong demand from China’s independent refiners.
Baker Hughes reported that the U.S. oil and natural gas rig count declined for the fourth straight month, reaching its lowest level since October 2021. Oil rigs specifically fell by six this week to 432, underscoring potential production constraints ahead.
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