Oil Prices Decline as OPEC Supply Boost and US-India Tensions Weigh on Market

Highlights:

• West Texas Intermediate (WTI) crude prices fell 1.5% to near $US66 a barrel at the time of writing, as OPEC+ approved an additional 547,000 barrels-per-day output increase for next month, raising oversupply concerns.
• US President Donald Trump’s renewed threats to impose tariffs on India for buying Russian oil further pressured the market, intensifying fears of geopolitical disruptions to global energy trade.
• Investors are cautiously watching for diplomatic developments, including US Special Envoy Steve Witkoff’s expected visit to Russia, which could signal a potential easing of tensions before any major penalties are enforced.

Oil prices retreated in volatile trading as investors assessed the implications of OPEC+’s latest supply increase and growing geopolitical tensions. West Texas Intermediate (WTI) crude fell 1.5% to settle near $US66 a barrel at the time of writing, as the market reacted to US President Donald Trump’s fresh threats of imposing tariffs on India for purchasing Russian oil.

OPEC+ Adds to Supply Pressure

The price decline followed OPEC+’s decision to endorse an additional 547,000 barrels per day of production starting next month. The move has sparked concerns over a potential oversupply in global markets, especially as demand outlooks remain clouded by macroeconomic uncertainties.

“The market is grappling with the immediate impact of OPEC+’s aggressive output hike,” said Frank Monkam, head of macro trading at Buffalo Bayou Commodities. He added that ongoing geopolitical risks are adding to market jitters, with the Russia-Ukraine conflict yet to see a resolution.

US-India Trade Tensions Resurface

President Trump’s renewed warnings of levying economic penalties on India for its continued imports of Russian crude have further complicated the oil market’s sentiment. The announcement reignited concerns about trade frictions, which could affect global energy flows and demand dynamics.

However, some investors remain cautious about overreacting, noting Trump’s history of aggressive rhetoric that often gets reversed. The anticipation of US Special Envoy Steve Witkoff’s planned visit to Russia this week has also raised hopes of a potential diplomatic breakthrough between Washington and Moscow, which could ease market anxieties.

Outlook Hinges on Geopolitical Developments

Market participants are now watching for signs of de-escalation in the US-Russia-India oil standoff, alongside monitoring OPEC+’s next moves to gauge near-term price direction.

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