Brent crude settled 1% lower on Tuesday, trading slightly above $64 per barrel, while West Texas Intermediate (WTI) hovered near $61. The pullback came as investors await key OPEC+ meetings that could determine production policy for July, stoking fresh concerns about a potential supply glut.
OPEC+ Faces Crucial Policy Decision
The OPEC+ Joint Ministerial Monitoring Committee (JMMC) is scheduled to meet on Wednesday, with a full ministerial meeting led by Saudi Arabia following on Saturday. Delegates report that preliminary talks last week suggested support for a third consecutive month of significant output hikes.
Rising spare capacity and the prospect of sustained production increases have amplified fears of oversupply, particularly amid fragile demand recovery. This concern is reflected in parts of the Brent futures curve flipping into contango—a market structure where near-term prices trade below longer-dated contracts, often interpreted as bearish for fundamentals.
Weighing Demand Recovery vs. Geopolitical Risk
“Crude fundamentals remain under great pressure,” noted Gao Jian, analyst at Qisheng Futures Co. in Shandong, adding that “early gains were likely driven by improved macro risk sentiment” rather than supply-demand imbalances.
Oil prices have been gradually declining since mid-January, pressured by weakening global demand signals and heightened macroeconomic risks. Tensions surrounding global trade, particularly related to sweeping tariffs from the Trump administration and countermeasures by affected nations, have further clouded the demand outlook.
However, some recent signs suggest trade relations may be stabilizing, providing modest relief to sentiment.
Geopolitical Flashpoints Add Complexity
Geopolitical uncertainties remain a wildcard. On Tuesday, U.S. President Donald Trump warned via social media that Russian President Vladimir Putin was “playing with fire,” raising the possibility of additional U.S. sanctions on Moscow. Such developments could inject volatility into energy markets, particularly if they disrupt supply from major producers.
