Global oil prices saw a significant recovery on Monday after a sharp decline the previous week, as OPEC+ decided to increase output by a smaller margin than markets feared. Meanwhile, geopolitical developments in Eastern Europe and the Middle East, along with renewed trade tensions from the United States, further amplified the risk sentiment, boosting demand for crude oil.

Brent and WTI React to OPEC+ Decision

Brent crude for August delivery rose as much as 2.1% to $64.09 a barrel, recovering some of the 2.2% lost the previous week. West Texas Intermediate (WTI) hovered near $62, supported by supply-side restraint and geopolitical unease.

The production decision came over the weekend, when the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) agreed to raise output by 411,000 barrels per day (bpd) in July. This mirrored the additions made in May and June, defying rumors that a much larger boost was under consideration. Investors viewed the move as moderate and controlled, helping support oil’s rebound.

Heightened Geopolitical Risk Boosts Oil Demand

Oil markets are highly sensitive to global political disruptions, especially when involving major oil-producing or -consuming regions. Over the weekend:

• Ukraine struck Russian air bases, intensifying the ongoing military conflict and raising concerns of retaliatory actions that could affect energy supply lines in the region.

• Iran condemned a new report on its expanding enriched uranium stockpile, signalling rising tensions in the Middle East over its nuclear program. The situation risks escalating into a broader confrontation, potentially disrupting oil flow from the Gulf.

• US President Donald Trump added fuel to the fire by announcing plans to increase tariffs on steel and aluminum, marking another chapter in the ongoing global trade war that has already affected commodity markets.

These events revived safe-haven demand for commodities like oil, even as economic concerns continue to weigh on overall consumption outlook.

Market Analysts Weigh In

According to Robert Rennie, Head of Commodity and Carbon Research at Westpac Banking Corp in Sydney, Brent crude is expected to stay within the $60–$65 range this summer.

“We may be seeing signs that the pace of increase could slow in the coming months,” Rennie noted, adding that some OPEC+ members had favored a pause in quota increases to reassess the market balance.

OPEC+’s next meeting is scheduled for July 6, where members will decide on August production plans. A key dynamic within the alliance is Saudi Arabia’s effort to penalize over-producing members like Iraq and Kazakhstan, aiming to preserve cohesion and output discipline.

A Volatile Year for Oil

Even with this rebound, crude remains almost 15% lower in 2025 so far, reflecting months of volatile trading amid tariff conflicts, uneven recovery in global demand, and changing OPEC+ strategies. Earlier in the year, prices plummeted to four-year lows as Trump's aggressive trade posturing rattled markets, only to see modest recoveries driven by supply interventions and speculative activity.

Analysts say the transition away from OPEC+'s previous strategy of defending high prices by curbing output has added unpredictability to the market. This is especially important given the complex global economic environment, where fiscal and monetary policy changes in major economies are influencing commodity prices.

What’s Next for Crude Oil?

While Monday’s rally suggests renewed optimism for the oil market, there are still several factors that could affect its trajectory:

• Actual implementation of the OPEC+ quota hike and whether members adhere to limits.

• Further escalation in geopolitical flashpoints such as Russia-Ukraine or US-Iran.

• Trade policy actions from the United States that may reduce global industrial activity.

• Sluggish global growth projections that could undermine oil demand recovery.

Energy traders and analysts are now closely watching for inventory data, refinery output, and economic indicators from China and the US, which will play a significant role in determining near-term direction.

In conclusion, the current uptick in oil prices is the result of a cocktail of moderated supply, rising geopolitical stress, and investor reassessment of global economic risks. With OPEC+ navigating internal politics and external expectations, and with major powers embroiled in strategic disputes, the oil market may see sustained volatility through the second half of the year.

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