RJ Kesari News Desk: Following the announcement, international crude prices slipped below $72 per barrel, raising expectations of softer energy prices worldwide. However, petrol and diesel prices in India remain unchanged for now.

OPEC+ Announces Another Production Hike

OPEC+ has agreed to raise crude oil production by 188,000 barrels per day (bpd) starting in August. This marks the fifth consecutive monthly production increase, as the group gradually reverses the voluntary output cuts introduced in 2023 to stabilize global oil prices.

The seven key producers leading the increase—Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman—have already restored nearly 800,000 bpd of production between April and July. If a similar increase is approved in the group's next meeting, most of the 2023 production cuts will effectively be rolled back.

Crude Oil Slips Below $72 Per Barrel

Following the production announcement, benchmark crude prices continued to decline.

• Brent Crude: Below $72 per barrel
• West Texas Intermediate (WTI): Around $68 per barrel

Market analysts believe that global oil supply could exceed demand in the coming months, putting additional downward pressure on crude prices.

Hormuz Strait Supply Concerns Ease

Another key reason behind the decline in crude prices is the improvement in oil shipments through the Strait of Hormuz, one of the world's most critical energy corridors.

Recent geopolitical tensions had disrupted tanker movements, forcing several vessels to delay or reroute shipments. However, after diplomatic efforts and a ceasefire, oil and gas exports through the region have largely returned to normal.

Since major exporters such as Saudi Arabia, Iraq, and Kuwait rely heavily on this route, easing supply concerns has reduced the geopolitical premium previously built into oil prices.

Why Are Prices Falling Despite Lower Production?

Although OPEC's latest data shows production remains below pre-conflict levels, commodity markets typically react to future expectations rather than current supply alone.

Investors now expect global output to continue increasing as:

• OPEC+ gradually raises production.
• Export operations normalize.
• Supply disruptions continue to ease.

These expectations have outweighed concerns over current production levels.

Weak Global Demand Adds More Pressure

Demand-side factors are also contributing to weaker crude prices.

• Oil imports in China, the world's largest crude importer, have slowed due to weaker industrial activity and uneven economic growth.
• Oil production outside OPEC+, particularly in the United States, remains strong.
• Additional strategic petroleum reserves released by major economies have further increased global supply.

Together, these developments have strengthened expectations of an oversupplied oil market.

Oil Prices Return Close to Pre-Conflict Levels

During the peak of recent geopolitical tensions, Brent crude briefly crossed $120 per barrel amid fears that the Strait of Hormuz could be blocked.

With those risks now easing, crude prices have retreated close to their pre-conflict levels. Analysts say the market's focus has shifted away from geopolitical uncertainty and back toward the global supply-demand balance.

Will Petrol and Diesel Become Cheaper in India?

Despite softer crude prices, petrol and diesel prices in India have not changed.

According to Union Petroleum Minister Hardeep Singh Puri, Indian refiners are still processing crude oil purchased at higher prices several weeks ago. As a result, any reduction in retail fuel prices is unlikely until refiners begin receiving consistently cheaper crude supplies.

Industry experts believe that if global crude prices remain low for an extended period, fuel prices in India could be reviewed later, possibly toward the end of August or early September.