Oil prices fell on Wednesday as increased production from OPEC+ and escalating trade tensions raised concerns about a potential oversupply and weakening global demand.
Brent crude dropped 0.4% to $65.40 per barrel, while U.S. West Texas Intermediate (WTI) decreased to $63.16. This decline follows a brief rally driven by Canadian wildfire-related supply disruptions and stalled U.S.-Iran nuclear deal talks. However, plans for OPEC+ to boost output by 411,000 barrels per day in July have tempered market optimism.
The market remains cautious amid ongoing U.S.-China trade tensions. President Trump’s accusations against China for breaching a tariff rollback agreement have heightened uncertainties, with the OECD downgrading its global growth forecast as a result.
Despite supply concerns due to Canadian wildfires affecting approximately 350,000 barrels per day, surpassing 75% of OPEC+’s planned production increase, expectations for future oversupply persist. This is reflected in the oil futures market structure, with short-term backwardation due to low inventories and longer-term contango anticipating higher supply and slowing demand.
