Global oil prices saw a modest recovery on Tuesday, climbing off three-week lows as traders shifted their focus toward upcoming trade negotiations and the much-anticipated July OPEC+ meeting. After a sharp decline sparked by easing geopolitical tensions and expectations of increased oil supply, the market is now stabilizing as key economic events come into view.
Crude Prices Edge Higher After Recent Slump
At 08:15 ET (12:15 GMT), Brent crude oil futures for September delivery rose 0.7%, reaching $67.18 a barrel. This marks a recovery from their lowest level since June 11—shortly before the Israel-Iran conflict. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures gained 0.8%, trading at $65.62 per barrel.
This upward movement follows a period of bearish sentiment in the market, driven by expectations that global supply will rise substantially in the coming months, especially as OPEC+ continues to unwind its production cuts. However, optimism around global trade discussions is starting to balance out those supply-side concerns.
Trade Talk Optimism Lifts Market Sentiment
A renewed sense of cautious optimism is growing in global oil markets, largely tied to expectations that the U.S. administration will strike multiple trade deals by the looming July 9 deadline set by President Donald Trump.
Tensions briefly flared on Monday when President Trump criticized Japan and signaled a possible halt to trade talks with Tokyo. At the same time, U.S. Treasury Secretary Scott Bessent warned that countries still risk facing hefty tariffs despite ongoing negotiations.
Yet, some progress is evident. The U.S. and China—representing the world’s two largest economies—have reached a fresh agreement, while Canada has rolled back its tech tax targeting major U.S. companies. This move reopened the door for renewed trade negotiations.
In Europe, the European Commission has sent officials to Washington this week with three primary demands, aiming to finalize a principle-based agreement, leaving finer details for later. This flurry of activity has reignited hope that major trade disputes can be resolved—an outcome that would support stronger global growth and bolster oil demand.
OPEC+ Output Meeting Set to Reshape Supply Landscape
As attention shifts from trade talks, the spotlight also falls on the upcoming OPEC+ meeting later this week. The cartel—led by Saudi Arabia and supported by Russia—is expected to continue its strategy of gradually reversing the deep production cuts implemented during the pandemic-era downturn.
According to a recent Reuters report, OPEC+ plans to increase oil output by 411,000 barrels per day in August. This follows similar hikes in May, June, and July, bringing the total supply restoration for 2025 to around 1.78 million barrels per day.
Despite this ramp-up, the overall increase remains modest compared to the total cuts made over the past two years. Analysts at ING believe that OPEC+ is likely to stay on course with its strategy of aggressive supply restoration.
“Given its strategy shift, we believe the group will continue with these large increases,” ING noted. “This would see the full 2.2 million barrels per day of supply brought back online by the end of the third quarter, 12 months ahead of the original schedule.”
According to the report, this surge in supply is expected to leave global oil markets well-stocked for the remainder of the year. A surplus is anticipated in the fourth quarter, which could keep oil prices under pressure unless unexpected geopolitical events shake up the current balance.
Geopolitical Risk Premium Fades
One of the key reasons for the recent dip in oil prices was the reduction of geopolitical tension, particularly the ceasefire between Israel and Iran. This de-escalation has significantly diminished the geopolitical risk premium that had inflated prices earlier this year.
Market watchers now appear more focused on fundamental supply-demand dynamics rather than short-term geopolitical events. With substantial spare production capacity still in reserve, OPEC+ is in a strong position to manage price volatility going forward.
What’s Next for Oil Traders?
The immediate future of oil prices will likely hinge on two major factors: the outcome of global trade negotiations and the final decision from the upcoming OPEC+ meeting. If trade talks proceed positively, we could see a boost in oil demand expectations, reinforcing current price levels or even pushing them higher.
However, should OPEC+ deliver more aggressive supply increases than anticipated, or if trade tensions escalate again, downward pressure could resume.
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