Bearish News Hits as OPEC+ Significantly Raises Output! Tariff Update: US Trade Representative Says Maintain Status Quo

The U.S. Trade Representative stated that the tariff policy will basically remain unchanged.

According to CCTV reports, on August 3 local time, U.S. Trade Representative Greer stated that the new round of tariffs imposed by U.S. President Trump on multiple countries last week is "basically set" and will not be adjusted in the current negotiations. This includes a 35% tariff on goods imported from Canada, a 50% tariff on Brazil, a 25% tariff on India, and a 39% tariff on Switzerland. Greer stated that some of the tariffs are set based on bilateral trade surpluses and deficits, and "these rates are basically fixed."

OPEC+ significantly increases production! Will international oil prices continue to fall?

Oil prices have been hit by bearish news again, with international crude prices opening nearly 1% lower on Monday.

According to a report by Xinhua News Agency, the Organization of the Petroleum Exporting Countries (OPEC) announced in a statement on the 3rd that eight major oil-producing countries within OPEC and non-OPEC have decided to increase daily production by 547,000 barrels in September. Representatives from Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman held an online meeting to discuss the situation and outlook of the international oil market. The statement said that given the current robust market fundamentals and low oil inventories, the eight countries decided to adjust production levels. Additionally, these countries will flexibly adjust the pace of production increase based on market conditions to maintain oil market stability. In August, these countries increased daily production by 548,000 barrels. In November 2023, the aforementioned countries announced voluntary production cuts of 2.2 million barrels per day, and these measures were subsequently extended multiple times, eventually being prolonged from December 2024 to the end of March 2025. In March of this year, the eight countries decided to gradually increase oil production starting from April 1.

Starting from April 2025, OPEC+ will significantly shift its production strategy from a previous cycle of output cuts to one of output increases, with cumulative additional production reaching 1.919 million barrels per day from April to August. This marks the organization’s full reversal—one year ahead of schedule—of the voluntary production cut of 2.2 million barrels per day implemented in November 2023 by eight core member countries including Saudi Arabia and Russia, and accelerates its efforts to compete for global crude oil market share.

Futures Daily reporters have noted that on August 1st, international oil prices fell sharply, with both WTI crude oil and Brent crude oil dropping by nearly 3%. In particular, the price of Brent crude oil futures for October fell below $70 per barrel.

Ye Haiwen, manager of the Energy and Chemical Research Center at Guomao Futures Research Institute, told reporters that although OPEC+ began to ease voluntary production cuts starting in April, the production increase in the past few months has fallen far short of the target increase. According to the OPEC monthly report, OPEC+ production increased by 349,000 barrels per day in June, with production in the eight countries under the agreement period rising by 394,000 barrels per day. The OPEC+ decision to increase production does not fully translate into actual output, which may be delayed or adjusted due to various factors such as technical constraints and geopolitical issues. It is recommended to pay close attention to the actual production performance of OPEC+ member countries going forward.

The current decline in oil prices is related to concerns about global energy demand triggered by disappointing U.S. employment data and the Trump administration's tariff policies.

Three major organizations (EIA,OPEC、IEAThe monthly report indicates that global crude oil supply has increased significantly, while the growth rate of demand has slowed down.

EIA The monthly report shows that global crude oil and related liquids production in June was 104.9 million barrels per day, an increase of 628,000 barrels per day compared to May. It is expected that global crude oil and related liquids production will be 104.6 million barrels per day in 2025, an increase of 1.8 million barrels per day compared to 2024. The OPEC monthly report and IEA monthly report indicate that in June, OPEC countries' crude oil production increased by 219,000 barrels per day and 420,000 barrels per day compared to May, respectively.

On the demand side, EIAThe June monthly report shows that global demand for crude oil and related liquids reached 104.43 million barrels per day in June, an increase of 1.82 million barrels per day compared to May. The OPEC monthly report maintains its forecasts for global crude oil and related liquids demand in 2025 and 2026, projecting demand in 2025 to be 105.13 million barrels per day, an increase of 1.29 million barrels per day over 2024, which is unchanged from the June forecast. The IEA continues to lower its forecasts for the growth rate of global crude oil and related liquids demand for 2025 and 2026, estimating that demand in 2025 will increase by about 700,000 barrels per day compared to 2024, with the growth rate down by 20,000 barrels per day from the June forecast.

As of the end of June, OECD commercial crude oil and petroleum product inventories stood at 2.796 billion barrels, a decrease of 420,000 barrels compared to the end of May. Among them, U.S. commercial crude oil and petroleum product inventories were 1.226 billion barrels, down by 5.98 million barrels compared to the end of May.

"On the macro level, U.S. tariff policies bring significant uncertainty to demand, causing global market volatility and potentially dragging down the economy, overall suppressing crude oil demand. On the micro level, although it is currently the traditional peak consumption season, gasoline consumption is not as strong as expected, with year-on-year crack spreads being lower, while diesel crack spreads are higher year-on-year but weakening at the margin," said Zhang Zeyu, a crude oil and chemical researcher at Zheshang Securities. The overall U.S. EIA inventory remains at a low level, but the latest data shows a marginal accumulation in U.S. commercial crude oil inventories, and downstream refined product inventories have also accumulated. Meanwhile, global crude oil inventories are at historical highs.

Ye Haiwen believes that we are currently in the peak season for summer travel consumption in Europe and the United States. The latest weekly report from the U.S. EIA shows that the refinery utilization rate in the United States remains high, and gasoline and diesel consumption has returned to seasonal highs. With more than half of the consumption peak season already passed and the peak season expectations being realized, it is highly likely that oil prices will weaken seasonally. As of July 25th, the global crude oil supply-demand gap stood at 1.36 million barrels per day, and it is expected to reach its maximum in October, indicating that the pressure from oversupply will further intensify in the future.

Zhang Zeyu believes that the long-term pattern of oversupply in crude oil is difficult to change. Currently, India and Brazil have clearly refused the United States, stating they will not stop purchasing Russian crude oil. In the long term, with the gradual implementation of the OPEC+ increase of 2.5 million barrels per day, supply will become more relaxed. As the peak season for refined oil consumption gradually comes to an end, the overall pressure on crude oil will become more apparent, and related petrochemical product prices are likely to follow the downward trend of the cost side.

“In the medium to long term, the international crude oil market is showing a tendency toward a looser supply-demand balance, and there is still room for the price center to move downward. After a period of stabilization and rebound in the market, or during price surges caused by short-term factors such as geopolitical events, these will all present entry opportunities for medium- to long-term short positions,” said Ye Haiwen. He added that crude oil prices will exert downward pressure on chemical products from the cost side. However, at present, the prices of most domestic chemical products are already at historical lows, making them relatively resistant to further declines. Coupled with the implementation and promotion of domestic “anti-involution” policies, the profits of related products are expected to remain stable, and there is even the potential for further recovery.