Oil prices are sliding this week, and the reason is clear: more supply is coming.
According to Oil Price.com, crude oil markets opened lower as traders brace for an OPEC+ production boost of 411,000 barrels per day next month, compounded by a yearly cumulative increase of 1.78 million barrels daily, a ceasefire between Israel and Iran, and gloomy economic signals from China and beyond.
Let’s start at the top. Brent crude is trading at $67.63 per barrel, while West Texas Intermediate sits at $65.23 per barrel. These numbers reflect a market under pressure from multiple fronts.
The big news driving this dip is OPEC+ and its supply strategy. Next month’s expected increase of 411,000 barrels per day is just the latest in a trend, with preliminary reports showing a yearly rise of 1.78 million barrels daily. Reuters also noted over the weekend that OPEC+ intends to extend these production additions into August.
Traders are on edge as the group prepares to meet this Sunday to hash out next month’s plans. There’s even chatter, per Reuters’ unnamed sources, that August’s output boost could be larger than anticipated.
“We do think the group is most likely to still go ahead with the August accelerated unwinding,” said Richard Bronze, an analyst at Energy Aspects. This signals that OPEC+ might be prioritizing market share over price stability—a risky move for oil bulls.
Beyond supply, geopolitical factors are also weighing on prices. The recent Israel-Iran ceasefire has stripped away the wartime premium that often props up oil values during conflict. Without that tension, the market has one less reason to bid up barrels.
Meanwhile, economic signals aren’t helping. The global outlook remains cautious, and bearish sentiment is growing, especially with fresh data out of China.
China’s manufacturing PMI, a key indicator of industrial health, ticked up slightly to 49.7 this month from 49.5 in May, per Beijing’s statistics bureau. But don’t celebrate yet—it’s still below the 50 mark, signaling contraction for the third straight month.
“Two months of successive improvement, that's a decent reading given June was the first full month without Trump's prohibitive 100%-plus tariffs,” noted Xu Tianchen, an analyst at Economist Intelligence Unit. Still, the sub-50 reading underscores weakness in the world’s second-largest economy.
This isn’t just a China problem—it’s a global concern for oil demand. When factory activity stalls, energy consumption often follows, and that’s a red flag for investors betting on crude. Closer to home, U.S. drilling activity offers little relief. The active rig count for oil dropped by six in the latest week, with gas rigs down by two. Compared to last year, the U.S. oil patch is down a stark 47 rigs, with a total decline of 34 across all active rigs.
So, what’s the takeaway for wealth-builders? Oil prices are caught in a perfect storm of rising supply, fading geopolitical risk, and shaky economic data. This isn’t the time to double down on energy stocks without a clear hedge.
Instead, consider watching OPEC+’s Sunday meeting for clues on August output. If they accelerate production as rumored, prices could dip further—potentially a buying opportunity for the patient. For now, frugality rules: don’t overcommit to volatile sectors.
Markets hate uncertainty, and between OPEC+ supply games and China’s sputtering factories, there’s plenty of it. Stay nimble, keep cash on hand, and remember that building wealth means playing the long game, not chasing every barrel’s bounce.