Oil rose more than 1% on Monday on signs of strong demand, shrugging off the impact of a bigger-than-expected OPEC+ output increase for August and concerns about the potential impact of U.S. tariffs.

Brent crude futures rose 79 cents, or 1.2%, to $69.08 by 2:05 p.m. ET (18:05 GMT). U.S. West Texas Intermediate crude was at $67.29, up 29 cents, or 0.4%. 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. Travel industry statistics show a record number of Americans will be traveling for the Independence Day holiday by land and air.

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 over the previous three months.

The OPEC+ decision will bring back nearly 80% of the voluntary cuts of 2.2 million barrels per day from the 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.

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 for 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 prices also came under pressure as U.S. officials signaled a delay in when tariffs would kick in but failed to provide details on what changes would be made. 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.

"While U.S. trade policy is still in the works, the U.S. extending the deadline and moving away from punitive tariffs has helped lift some of the demand gloom that has prevailed since April," said Jeffrey McGee, managing director of advisory firm Makai Marine Advisors.

Meanwhile, geopolitical uncertainty persists. Yemen's Iran-aligned Houthi group said Monday that a cargo ship they attacked with gunfire, rockets and explosive-laden remote-controlled boats 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 hostage release deal. Iranian President Masoud Pezeshkian said he believed Iran could resolve its differences with the United States through dialogue, but trust would be an issue after U.S. and Israeli attacks on his country, according to an interview released on Monday. (alg)

Source: Reuters