The price of crude oil has shifted to bearish territory in light of softening demand, increased supply and evolving geopolitical risks.
Despite a brief lull following a ceasefire between the US and the Houthis, Yemen's Houthi rebels have resumed attacking ships in the Red Sea. A recent incident tragically resulted in a ship sinking and two crew members losing their lives, followed by another attack on the "Eternity C" that killed three mariners and wounded two others as of today, July 8, 2025. If these attacks persist, vessels will be forced to take longer, more expensive routes around Africa, alongside facing higher insurance premiums.
On the supply front, OPEC+ has decided to significantly boost oil output in August, signaling an accelerated unwinding of the 2.2 million barrels per day (bpd) production cuts initially implemented in 2023 to support prices. They plan an even larger increase of 550,000 bpd in September, defying analyst expectations. In essence, OPEC+ aims to restore the full 2.2 million bpd of production a year ahead of schedule. As a result, Saudi Arabia's oil production has already jumped by 400,000 bpd.
 |
| Data Source: JODI |
OPEC+ quickly recognized this new reality once President Trump took office, understanding that further production cuts to artificially inflate prices were off the table. The cartel's new strategy is to secure market share as global supply is expected to increase, particularly if sanctions on Iran are lifted, which could add millions of barrels per day to the market with foreign investment.
Traders and investors largely believe that oil prices are unlikely to exceed $100 a barrel, predicted by some investment banks as well as those with vested interests, as long as President Trump is in office.
Today, July 8, 2025, further escalating tensions, a European Union naval force has confirmed that three mariners were killed and two wounded in a Houthi attack on the Liberian-flagged cargo ship "Eternity C" in the Red Sea. This comes just after the previous attack on the "Magic Seas," solidifying fears of a renewed and more dangerous Houthi campaign against shipping in the vital waterway.
The European Commission has condemned the "Magic Seas" attack, highlighting the endangerment of crew and the risk of ecological disaster. Meanwhile, oil companies in the Philippines have announced price rollbacks today, attributing it to a decline in international oil prices following the ceasefire announcement in the Iran-Israel conflict.
Source link
