Crude oil prices are set for another weekly decline following the decision by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to boost production by another 411,000 barrels daily in July- making it the third time in a row. This decision, taken at its virtual monthly meeting at the weekend, doubles down on a historic policy shift that has sent crude prices sinking. The hike follows equally sized increases scheduled for May and June, marking a clear break with years of efforts by the group to support global oil prices. As at close of business at the weekend, Brent crude was trading at $62.78 per barrel, with West Texas Intermediate at $60.79 per barrel.

While there was a consensus for the July increase, supported largely by key nations led by Saudi Arabia, yet, some member states like Russia, expressed reservations, recommending a pause in the supply increases.

“OPEC+ isn’t whispering anymore,” said Jorge Leon, an analyst at Rystad Energy A/S, who previously worked at the OPEC secretariat. “May hinted, June spoke clearly, and July came with a megaphone.”

Oil briefly crashed to a four-year low under $60 a barrel in April after the OPEC+ first announced that they would bolster output by triple the scheduled amount, even as faltering demand and President Donald Trump’s trade war were already crushing the market.

Delegates have offered a range of explanations for the pivot by Riyadh, which had spent years defending high oil prices by restraining supplies.

According to reports by Bloomberg, some officials suggested the kingdom is trying to appease President Donald Trump, or to reclaim the market share relinquished to US shale drillers and other rivals.

Still, the medium report indicated that some delegates assert that OPEC+ is simply satisfying robust demand, while others say Saudi Arabia seeks to punish members like Kazakhstan and Iraq for cheating on their output quotas.

The strategy transition hasn’t been without a cost. While crude’s pullback offers relief for consumers and central banks grappling with inflation, it poses financial peril for oil producers in OPEC+ and around the world.

The downturn is also taking a toll in America’s shale oil heartlands, where companies like Diamondback Energy Inc. say production has peaked, despite Trump’s promise the country would “drill, baby, drill” in a new energy boom.

“We expect similar increases through until the end of the third quarter, as the group increases its focus on defending market share,” ING commodity analysts wrote in a note, suggesting the cartel’s policy will continue weighing on prices in the coming months as well.

Analysts at Libertex, an online outfit, contend that despite a deterioration in geopolitical stability across the key producing region of the Middle East, oil prices have managed to remain within a relatively narrow band over the past two months. For instance, they maintained that Brent crude oil’s recent price of $63.90 is still more than 15 per cent down from 1 April and close to the local low of $60.23 not previously seen since the height of the pandemic lockdowns in 2021. It’s been a similar story for WTI and Light Sweet, which were at $62.97 per barrel on Friday but which has since dropped to $60.97 per barrel as at close of business yesterday.

The situation, according to Libertex analysts, stems from the beginning of President Donald Trump’s tariffs, recession fears, and sticky inflation-factors which combine to make it challenging for oil to gain a foothold despite the geopolitical factors that would ordinarily lift the resource. Add to that OPEC+’s recent price control moves, leading to situations whereby supply and demand forces have been cancelling one another out over recent weeks.

But what additional factors are driving the oil market right now, and where is it likely headed over the summer and beyond?

Libertex explained that the geopolitical situation and domestic economic politics are both incredibly important, and the combination of ongoing and growing uncertainty in both the Middle East and Eastern Europe has implications for both the supply and demand side.

Data from the American Petroleum Institute released last week showed that US oil inventories shrank by 4.24 million barrels (mb) over the past week amid expectations of an added one million barrel. This has given cause for optimism as it suggests demand is strong and outstripping supply, which, combined with the other factors above, could lead to higher prices in the short term. However, preliminary economic data show that the US economy shrank by 0.3 per cent in Q1 2025. As such, fears of a recession could keep the oil bulls in check.

According to refiners, Saudi Arabia is tipped to lower its official oil prices for July to their lowest levels since January in response to the increased output, which would provide a solid stream of cheap and easily accessible oil to the huge Asian market. It certainly seems as if the EU and UK are anticipating significant price drops in the near term, with the two economic powerhouses pushing the US to lower the price cap on Russian oil from $60 to $50 a barrel.