Oil prices resist OPEC+ increase due to escalating geopolitical issues and tightening supply
Oil Prices Remain Volatile Amid Geopolitical Tensions and Supply Changes
Oil prices are experiencing volatility as geopolitical tensions and supply changes continue to impact the market.
In early August, OPEC+ members, including Saudi Arabia, Russia, Iraq, and others, agreed to gradually increase production by 547,000 barrels per day starting in September. This is part of unwinding voluntary supply cuts of 2.2 million barrels per day that were introduced earlier in the year. However, ongoing geopolitical tensions and economic concerns are keeping prices volatile.
Heightened geopolitical tensions, such as sanctions on Russian and Iranian oil, disruptions at Russian refineries, and U.S.-India trade disputes, create uncertainty and supply risks. For example, India’s continued purchases of Russian crude despite U.S. pressure have triggered U.S. tariff increases, threatening to tighten supplies further if India reduces Russian imports.
Brent crude futures have declined from $75/barrel in early April to lows around $64/barrel in June 2025 due to slowing global demand and tariff escalation fears. However, they have been volatile due to episodic geopolitical flare-ups such as Israeli strikes on Iran and subsequent ceasefires, which caused sharp price spikes followed by relief-driven drops. As of early August, Brent is trading near $66.5/barrel, and WTI is around $63.5-64/bbl.
Economic factors, such as weak U.S. labor market data and concerns over global economic growth, introduce downside risk to demand expectations, limiting price gains despite supply threats. Market expectations of a Federal Reserve rate cut have provided some price support amid these uncertainties.
The market's reaction to the OPEC+ output increase is influenced by a tug of war between increased supply and potential sanctions-driven disruptions to Russian oil. Trump's increasingly combative exchanges with former Russian president Dmitry Medvedev have reintroduced concerns about global energy security.
Trump has threatened sweeping secondary sanctions and tariffs on Russian oil buyers unless Moscow ends the war in Ukraine within days. Such measures could disrupt up to 2.75 million bpd of seaborne Russian crude, potentially forcing major importers such as India and China to source alternative-and likely more expensive-supplies.
The immediate outlook for oil hinges on whether geopolitical risks translate into real supply losses and whether demand remains resilient in the face of mixed economic data. The OPEC+ plan remains flexible, with the possibility of pausing or reversing the increases should market conditions warrant it.
Technical indicators suggest that the rebound in WTI and Brent crude oil prices may have further to run, with potential resistance at $67.48 for WTI and $71.26 for Brent.
Issac John, Managing Editor at Khaleej Times, is a seasoned business writer and economic analyst with over 45 years of experience in top-tier newspapers across UAE. Vijay Valecha, chief investment officer at Century Financial, also noted that the market's reaction to the OPEC+ output increase is influenced by a tug of war between increased supply and potential sanctions-driven disruptions to Russian oil. Frank Walbaum, market analyst at Naga, also pointed out that traders are alert to the dual forces at play, with potential disruptions to Russian crude shipments potentially underpinning prices as Trump's secondary tariff deadline approaches.
Global inventories remain below five-year averages, providing underlying support for oil prices. However, any significant disruption to Russian exports could tighten balances sharply, according to the IEA. The International Energy Agency (IEA) has projected that oil demand growth will slow in 2025 to about 1 million bpd from 2.2 million bpd in 2024 as post-pandemic rebounds fade and energy transition policies gather pace.
In conclusion, although OPEC+ is increasing production to stabilize supply, ongoing geopolitical tensions—especially relating to Russian and Iranian oil sanctions and U.S.-India tariff conflicts—continue to inject uncertainty that keeps oil prices volatile. Economic slowdown concerns also weigh heavily, resulting in prices fluctuating in the mid-$60s per barrel range for Brent and WTI crude as of early August 2025.
- The ongoing geopolitical tensions, such as sanctions on Russian and Iranian oil, disruptions at Russian refineries, and U.S.-India trade disputes, create uncertainty and supply risks in the business sector.
- In sports, the market's reaction to the OPEC+ output increase is influenced by a tug of war between increased supply and potential sanctions-driven disruptions to Russian oil, which could impact the cost of energy resources for various teams and organizations.
- In career news, Frank Walbaum, a market analyst at Naga, pointed out that traders are alert to the dual forces at play, with potential disruptions to Russian crude shipments potentially underpinning prices as Trump’s secondary tariff deadline approaches.
- A weather report may indicate that slowing global demand and tariff escalation fears have caused Brent crude futures to decline from $75/barrel in early April to lows around $64/barrel in June 2025. However, the prices have been volatile due to episodic geopolitical flare-ups such as Israeli strikes on Iran and subsequent ceasefires.
