Oil prices climbed by 1% on Monday, buoyed by signs of robust demand that outweighed market concerns regarding increased output from OPEC+ and potential U.S. tariffs. Brent crude rose by 91 cents (1.3%) to $69.20 per barrel, while U.S. West Texas Intermediate (WTI) gained 57 cents (0.8%) to reach $67.57. This rebound followed a dip earlier in the session, highlighting the market’s sensitivity to both supply and demand signals.
Strong Holiday Demand and Modest OPEC+ Output Drive Oil Market Optimism Upward
According to Dennis Kissler of BOK Financial, while supply is increasing, demand remains stronger than anticipated. This was supported by travel industry data showing a record number of Americans were set to travel during the Fourth of July holiday, boosting expectations for fuel consumption. Saudi Arabia further reinforced confidence in oil demand by raising the August selling price for its flagship Arab Light crude in Asia to a four-month high.

OPEC+ agreed to increase production by 548,000 barrels per day in August, a higher hike than the 411,000 bpd seen in previous months. This move aims to bring back nearly 80% of the 2.2 million bpd in voluntary cuts by eight OPEC producers. However, analysts noted that the actual output increase has been more modest, mainly driven by Saudi Arabia. Countries like Iraq and Kazakhstan are expected to struggle to boost production significantly due to existing limitations.
Tariff Uncertainty and Geopolitical Tensions Deepen Oil Market Volatility and Investor Concerns
Oil prices faced downward pressure from uncertainty around upcoming U.S. tariff policies. While officials indicated a delay in implementation, the lack of clarity regarding the rates stoked investor anxiety. Analysts warned that higher tariffs could negatively impact global economic activity and oil demand. U.S. Treasury Secretary Scott Bessent hinted at imminent trade announcements, noting a flurry of negotiations ahead of a critical July 9 deadline.
Geopolitical tensions added another layer of complexity to the oil market. The Houthi group in Yemen claimed to have sunk a cargo ship in the Red Sea—marking their first known high-seas attack in 2025. Meanwhile, Israeli Prime Minister Netanyahu’s meeting with President Trump and indirect talks with Hamas signaled ongoing regional unrest.
Iranian President Masoud Pezeshkian expressed hope for dialogue with the U.S. but noted lingering distrust due to recent hostilities, further adding to geopolitical uncertainty influencing oil markets.