The expectation of renewed diplomatic contacts between the US and Iran and the OPEC+ countries' decision to increase production triggered a sharp sell-off in global oil markets. Brent crude per barrel fell 7.4% to $83.41. West Texas Intermediate (WTI) crude was at $79.60.
Trump optimistic on Iran talks
US President Donald Trump stated that negotiations with Iran would resume today and that he was optimistic about reaching a deal. Trump expressed belief that an agreement could soon be reached on opening the Strait of Hormuz and Iran's "nuclear disarmament."
Trump said that talks with Saudi Arabia, the United Arab Emirates (UAE), Qatar and Iran led to the halting of the "large-scale attack" planned for this weekend, adding: "This would have been the largest attack since World War II. But they asked us not to do it. Please do not do this, they said; their neighbors said the same thing."
Trump, saying, "What we are doing now is talking to them through negotiations. It will start tomorrow afternoon and then we'll see what happens," stressed that he really wants to make a deal and save many "people's lives." Repeating his optimism about an agreement with Iran, Trump assessed, "They did not want us to do it and frankly Saudi Arabia didn't want it either. They think an agreement on the Strait of Hormuz and ultimately (Iran's) nuclear disarmament will be reached very soon."
OPEC+ to increase output in September
The OPEC+ group's decision to proceed with an output increase in September also contributed to the fall in oil prices. According to an OPEC statement, at a virtual meeting of Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, it was agreed to raise total production by 188,000 barrels per day from September. This decision was taken as part of the additional voluntary production cuts of 1.65 million barrels per day announced in April 2023 and in line with their "joint commitment to support stability in the oil market."
Under the decision, the highest output increases of 62,000 barrels per day each will be made by Saudi Arabia and Russia. Next month, Iraq will raise output by 26,000 barrels per day, Kuwait by 16,000, Kazakhstan by 10,000, Algeria by 6,000, and Oman by 5,000. The group's next meeting will be on September 6.
Technically in Brent crude, $83.75 may be watched as resistance and $82.97 as support.
