Oil prices fell on Monday as geopolitical risks in the Middle East eased and the prospect of an OPEC+ output hike in August raised supply expectations amid continued uncertainty over the global demand outlook.

Brent crude futures fell 12 cents, or 0.18%, to $67.65 a barrel by 0718 GMT, ahead of the August contract's expiry on Monday. The more active September contract was at $66.56, down 24 cents.

U.S. West Texas Intermediate crude futures fell 36 cents, or 0.55%, to $65.16 a barrel.

Both benchmarks posted their biggest weekly declines since March 2023 last week, but both are expected to finish higher in June with a second straight monthly gain of more than 5%.

The 12-day war that began with Israel targeting Iran's nuclear facilities on June 13 boosted Brent prices. Prices surged above $80 a barrel after the U.S. bombed Iran's nuclear facilities and then slumped to $67 after President Donald Trump announced an Iran-Israel ceasefire.

The market has shed much of the geopolitical risk premium embedded in prices after the Iran-Israel ceasefire, IG market analyst Tony Sycamore said in a note.

Weighing further on the market, four delegates from OPEC+, which includes allies of the Organization of the Petroleum Exporting Countries, said the group would raise output by 411,000 barrels per day in August, following increases of the same size in May, June and July.

OPEC+ meets on July 6 and it would be the fifth monthly increase since the group began rolling back production cuts in April.

However, bearish pressure from concerns about slower global oil demand, especially from China, is likely to persist.

Uncertainty around global growth continues to cap prices, said Priyanka Sachdeva, senior market analyst at Phillip Nova. China's factory activity contracted for a third straight month in June, as weak domestic demand and faltering exports weighed on manufacturers amid U.S. trade uncertainty.

In the U.S., the number of operating oil rigs, an indicator of future production, fell by six to 432 last week, the lowest level since October 2021, Baker Hughes (NASDAQ:BKR) said.

Source: Investing.com