Oil prices fell after reports that the OPEC+ alliance would consider a new round of supply increases when the group meets over the weekend. Global benchmark Brent fell as much as 2.1% in London, extending previous declines. Oil prices closed at a one-month high on Tuesday.

OPEC+ will consider further production increases at its meeting on Sunday, Reuters reported, citing two sources familiar with the discussions. Most analysts and traders expect OPEC+ to maintain production for October, halting a long-running production increase. An OPEC delegate said last month that the group could take one of several steps at its September meeting, including raising or cutting production.

The cartel has surprised traders several times this year by embarking on a strategy to regain market share, despite expectations that supply outside the group would surge toward the end of 2025. That is expected to leave the oil market oversupplied by the fourth quarter. New OPEC+ additions could worsen that surplus, although questions remain about the exact volume the group might add.

"The headlines about the tranche withdrawal will spook the market, but in reality, we expect to see fewer barrels actually returned than the headlines suggest," said Emily Ashford, head of energy research at Standard Chartered Plc. This is due to "compensation requirements for excess production from some countries, and capacity constraints from others."

The discussions are taking place against a backdrop of heightened geopolitical focus. US President Donald Trump is trying to pressure India to buy less Russian oil in an effort to halt the war in Ukraine. He has also deployed naval assets to Venezuela in an apparent effort to encourage drug trafficking.

These heightened risks, along with buying from trend-following commodity trading advisors, have helped push crude oil higher in recent days. (alg)

Source: Bloomberg