Brent crude oil prices tumbled on expectations of renewed diplomatic contacts between the US and Iran, as well as OPEC+'s decision to raise output in September. After climbing to $90.80 on Friday, Brent crude fell 7.4% to $83.41 today. West Texas Intermediate (WTI) crude also dropped to $79.60 per barrel.
Trump announces Iran negotiations
US President Donald Trump stated that negotiations with Iran would resume today and expressed optimism about reaching an agreement. Trump also voiced optimism that a deal could soon be reached on opening the Strait of Hormuz and Iran's "nuclear disarmament."
Trump explained that talks with Saudi Arabia, the United Arab Emirates (UAE), Qatar and Iran prompted him to halt the "large-scale attack" planned for this weekend. "This would have been the biggest attack since World War II. But they asked us not to do it. They said, 'Please don't do it'; their neighbors said the same thing," he said.
Trump added, "What we are doing now is talking to them through negotiations. They will begin tomorrow afternoon, and then we'll see what happens." He said he very much wants to make a deal and save many people's lives. Pointing to his optimism about a deal with Iran, Trump stated, "They didn't 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 raise output in September
The decline in oil prices was also driven by OPEC+'s decision to proceed with a production increase in September. According to a statement from OPEC, a virtual meeting of Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman decided to raise total production by 188,000 barrels per day starting in September, in line with their "joint commitment to support stability in the oil market" and as part of the additional voluntary production cuts of 1.65 million barrels per day announced in April 2023.
Under the decision, the largest output increases will be implemented by Saudi Arabia and Russia, each at 62,000 barrels per day. Next month, Iraq will increase production 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 is scheduled for September 6.
Technically, for Brent crude, $83.75 is seen as a resistance level and $82.97 as a support zone.
