Morning Highlights: Oil Slides as OPEC+ Hikes Output Again; Sanctions Fears Still Linger

Monday, August 4, 2025

Oil prices fell Monday after OPEC+ agreed to another large output increase for September, adding to supply pressures amid lingering uncertainty over U.S. tariffs and sanctions against Russia.

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Market Snapshot (as of 6:30 EST):

• Brent (Oct): $68.53 (▼$1.14 )

• WTI (Sep): $66.13 (▼$1.20)

Both contracts dropped by around $2 on Friday, snapping a three-day rally.

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OPEC+ Output Hike Weighs on Sentiment

OPEC+ announced on Sunday it would raise output by 547,000 barrels per day in September, accelerating the rollback of its 2022 production cuts.

• This completes a full reversal of the 2.5 million bpd in earlier cuts.

• The 8 OPEC+ members that have added supply since March are now expected to increase output by a cumulative 1.7 million bpd, Goldman Sachs estimates.

• Other OPEC+ nations with compliance issues are cutting back to remain within quota limits.

“While OPEC+ policy remains flexible, we assume they’ll pause quota changes after September,”

— Goldman Sachs

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Goldman Maintains Forecast, Flags Tariff Risks

Despite recent price volatility, Goldman Sachs is holding its Q4 Brent crude forecast at $64/bbl, citing:

• Accelerating OPEC+ supply normalization

• Growing geopolitical uncertainty

• Weakening U.S. economic momentum

• Rising risks of global demand slowdown from tariffs and trade disputes

Goldman projects that U.S. tariffs could cut global oil demand by 800,000 bpd through 2026. They also see a higher chance of U.S. recession in the next 12 months.

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U.S. Secondary Sanctions Pressure Russian Crude Buyers

Markets remain wary as President Trump threatens 100% secondary tariffs on countries importing Russian crude—primarily China and India, Russia's top buyers.

• Two tankers carrying Russian crude to India have diverted to alternate destinations amid sanctions fears.

• Analysts say this puts up to 1.7 million bpd of Russian crude at risk if Indian refiners scale back purchases.

Still, Indian government sources reiterated Saturday that India will not halt Russian imports, signaling resistance to U.S. pressure.

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PVM: Price Rally May Be “Ephemeral”

“In the medium term, oil prices will be shaped by a mix of tariffs and geopolitics,”

— Tamas Varga, PVM Oil Associates

While supply shocks may support prices briefly, Varga expects only temporary price spikes if new sanctions trigger disruptions.

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Watch This Week:

• Implementation details of U.S. secondary tariffs on Russia

• Reaction from China and India to new sanctions threats

• EIA inventory data on Wednesday

• Market response to OPEC+ September supply increases

• Further tanker diversions or reroutings away from Russian ports