Oil rose 1% on Monday as signs of strong demand outweighed the impact of a bigger-than-expected OPEC+ output increase in August, as well as concerns about the potential impact of U.S. tariffs.

Brent crude futures rose 91 cents, or 1.3%, to $69.20 by 12:20 p.m. ET (1620 GMT). U.S. West Texas Intermediate crude was at $67.57, up 57 cents, or 0.8%. The benchmarks had dropped to $67.22 and $65.40, respectively, earlier in the session.

"The supply picture is clearly improving, however, stronger demand remains above expectations as well," Dennis Kissler, senior vice president of trading at BOK Financial, said.

Record numbers of Americans are set to travel for the Fourth of July holiday by road and air, according to travel industry statistics. The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed on Saturday to raise output by 548,000 barrels per day in August, more than the 411,000 barrels per day they made in the previous three months.

The OPEC+ decision will bring back nearly 80% of the voluntary cuts of 2.2 million barrels per day from eight OPEC producers to the market, RBC Capital analysts, led by Helima Croft, said in a note.

However, the actual production increase so far has been smaller than planned and most of the supply has come from Saudi Arabia, analysts said.

The actual month-on-month increases in OPEC+ production have generally been smaller, as overproducing Iraq and Kazakhstan are unlikely/unable to raise their output significantly compared with recent peaks reached during the first quarter, analysts at research firm FGE wrote in a note. In a show of confidence about oil demand, Saudi Arabia on Sunday raised the price of its flagship Arab Light crude in August to a four-month high in Asia.

Goldman analysts expect OPEC+ to announce a final increase of 550,000 barrels per day for September at its next meeting on Aug. 3.

Oil also came under pressure as U.S. officials hinted at a delay in when tariffs would kick in, but failed to provide details on what the tariffs would entail. Investors worry that higher tariffs could slow economic activity and oil demand.

The United States will make several trade announcements in the next 48 hours, Treasury Secretary Scott Bessent said Monday, adding that his inbox was full of final offers from countries to reach a tariff deal before a July 9 deadline.

"Concerns over (U.S. President Donald) Trump's tariffs continue to be a key theme in the second half of 2025, with a weaker dollar the only support for oil at the moment," said Priyanka Sachdeva, senior market analyst at Phillip Nova. Meanwhile, geopolitical uncertainty persists. Yemen's Iran-aligned Houthi group said on Monday that a cargo ship they attacked with gunfire, rockets and a remote-controlled boat laden with explosives had sunk in the Red Sea, their first known attack on the high seas this year.

Israeli Prime Minister Benjamin Netanyahu will meet with Trump at the White House on Monday, as Israeli officials hold indirect talks with Hamas aimed at reaching a U.S.-brokered Gaza ceasefire and a deal to release hostages. Iranian President Masoud Pezeshkian said he believed Iran could resolve its differences with the United States through dialogue, but that trust would be an issue after U.S. and Israeli attacks on his country, according to an interview released on Monday. (alg)

Source: Reuters