Oil on Monday put aside the impact of a higher-than-expected output hike of OPEC+ for August as well as concern about the potential impact of U.S. tariffs, with prices reversing early losses as a tight physical market lent support.
The Organization of the Petroleum Exporting Countries (OPEC) and their allies, a group known as OPEC+, agreed on Saturday to raise production by 548,000 barrels per day (bpd) in August, more than the 411,000 bpd hikes they made for the earlier three months.
Brent crude futures fell as low as $67.22 a barrel but by 10:18 a.m. GMT were up 40 cents, or 0.6%, to $68.70. U.S. West Texas Intermediate crude was at $67.04, up 4 cents, and up from an earlier low of $65.40.
"For now, the oil market remains tight, suggesting it can absorb additional barrels," said UBS analyst Giovanni Staunovo.
The OPEC+ decision will bring nearly 80% of the 2.2 million bpd voluntary cuts from eight OPEC producers back into the market, RBC Capital analysts, led by Helima Croft, said in a note.
However, the actual output increase has been smaller than planned so far and most of the supply has been from Saudi Arabia, they added.
In a show of confidence about oil demand, Saudi Arabia on Sunday raised the August price for its flagship Arab Light crude to a four-month high for Asia.
Goldman analysts expect OPEC+ to announce a final 550,000 bpd increase for September at the next meeting on August 3.
Oil had also come under pressure as U.S. officials flagged a delay on when tariffs would begin but failed to provide details on changes to the rates that will be imposed. Investors are worried that higher tariffs could slow economic activity and oil demand.
"Concerns over Trump's tariffs continue to be the broad theme in the second half of 2025, with dollar weakness the only support for oil for now," said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
