Oil Prices Decline Amid OPEC+ Production Increase and US Economic Concerns

Falling demand signals and rising output put pressure on crude markets as trade tensions mount

Oil Prices Slide Following OPEC+ Output Hike

Oil prices began the week on the back foot as OPEC+ announced a fresh production increase for September, fuelling market concerns over a potential supply glut. The decision comes amid rising economic uncertainty in the United States and mounting fears about the impact of sweeping new trade tariffs introduced by President Donald Trump.

In early Monday trading:

• Brent crude futures dropped 0.5% to $69.35 per barrel
• West Texas Intermediate (WTI) crude fell 0.3% to $65.90 per barrel

These declines continue losses seen on Friday, following weaker-than-expected employment figures from the US—the world’s largest oil consumer.

OPEC+ Maintains Steady Output Increases

The Organisation of Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, agreed on Sunday to raise output by 547,000 barrels per day (bpd) in September. This follows similar hikes of 548,000 bpd in August and 411,000 bpd in July, marking the sixth consecutive month of production increases.

While the move was widely anticipated by analysts, it reinforces the trend of unwinding the two-year-long supply restrictions initially implemented during the pandemic to stabilise prices.

However, with global demand signals weakening, the prospect of further supply entering the market is raising concerns about downward pressure on prices in the months ahead.

Weak US Economic Data Sparks Demand Fears

Much of the pressure on oil prices also stems from recent weaker US economic data. The nonfarm payrolls report, released Friday, showed a slowdown in job creation—raising fears of a broader economic deceleration.

In addition:

• A drop in US Purchasing Managers’ Index (PMI) figures pointed to slowing business activity.
• Economists now fear a softening in fuel demand growth just as global supplies are set to increase.

This combination of weakening demand and rising supply could weigh heavily on prices if the economic outlook continues to dim.

Trade Tariffs Add Further Market Jitters

Adding another layer of complexity, President Trump’s announcement of steep trade tariffs targeting at least 70 countries has created further unease in the energy markets. Though the specifics are still unfolding, the potential for retaliatory measures and disrupted global trade is seen as a risk to broader economic activity—and by extension, oil demand.

On the flip side, Trump’s threats of additional sanctions on Russian oil—especially towards major buyers like China and India—did provide brief support to crude prices last week. Any escalation in sanctions could restrict Russian exports and tighten global supply, potentially offsetting the impact of the OPEC+ production hike.

Conclusion: Volatile Conditions Ahead for Oil Markets

The global oil market finds itself at a crossroads. On one hand, OPEC+ continues to ease production curbs, increasing global supply. On the other, economic signals from the US—particularly in employment and business activity—suggest potential weakness in demand.

With the added complexity of new trade tariffs and geopolitical tensions, especially surrounding Russia, investors and traders should expect continued volatility in oil prices. For now, market sentiment appears cautious, and crude could remain under pressure unless demand indicators start to firm up or supply disruptions materialise.

Whether oil stabilises or faces further declines may ultimately depend on how global economies respond to inflation, tariffs, and evolving political risks in the second half of 2025.

Sources: (Investing.com, Reuters.com)