Brent declines after OPEC+ announces another production hike

The front-month ICE Brent contract has declined by $0.48/bbl on the day from Friday, to trade at $71.62/bbl at 09.00 GMT.

IMAGE: A crude oil storage facility. Getty Images

Upward pressure:

The global oil market is currently in a wait-and-watch mode amid the US-Iran standoff on a permanent transit protocol through the Strait of Hormuz.

Iran plans to introduce new transit fees for vessels in the Strait of Hormuz, its ambassador to China Abdolreza Rahmani Fazli said on Saturday, adding that Tehran is working with Oman on a new framework covering shipping services and regional supervision.

Fazli further indicated at the World Peace Forum in Beijing that “friendly” countries will receive special treatment, Iranian state media reported.

Notably, the US has consistently rejected Tehran's proposals to impose transit fees or tolls in the Strait of Hormuz, maintaining that the strategic waterway must remain open to passage for global commerce.

Downward pressure:

Brent crude’s price opened the week lower after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to increase oil output again in August.

Seven members of the oil producers’ group have decided to implement a production adjustment of 188,000 b/d next month.

The adjustment will come from the 1.65 million b/d additional voluntary cut announced in April 2023, OPEC said.

The announcement comes amid the temporary peace agreement between Washington and Tehran – a move that is expected to reopen the Strait of Hormuz to commercial vessel traffic and restore global crude oil flows.

By Aparupa Mazumder

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