Date: 7th July 2025.


Oil Prices Drop But Bullish Potential Remains!



Trading Leveraged products is Risky


OPEC members confirm they will increase oil production and output in July and August. As a result, the price of Oil fell 1.40% on Monday, but almost regains its previous losses. According to reports, the higher output is an attempt by OPEC members to regain market share. Oil has largely been trading sideways since June 24th after the 16% decline. What’s next for Crude Oil prices?

US Oil / Crude Oil Chart


OPEC and New Oil Output!


Members of OPEC have seen tensions rise as certain members have been producing more oil than others. As a result, the main topic for discussion during yesterday’s meeting was an increase across all members. This development was the main reason for the day’s bearish price gap.


As Bloomberg reports, Riyadh is trying to win back lost market share by asking to continue the production quota adjustment of 411,000 barrels per day in August, and possibly in the months thereafter. Saudi Aramco has already lowered the price of Arab Light crude for Asian buyers by $0.20 in July. At the same time, eight OPEC+ countries, including Russia, Saudi Arabia, Algeria, Iraq, Kuwait, the UAE, Kazakhstan, and Oman, are slowly lifting their voluntary production cuts, raising output by another 386,000 barrels per day.


Morgan Stanley analysts expect Brent Crude to fall to around $60.20 and Crude Oil to $58.80, with a supply surplus of 1.3 million barrels per day in 2026.


Potential For Regained Bullish Momentum


Regardless of the bearish price gap, traders should note that bullish momentum is being regained. According to many economists, the potential for higher oil prices continues to linger at the back of traders’ minds despite the US actively looking to bring prices lower. This includes stronger-than-expected economic data, particularly from the employment sector.


The US latest employment report came as a shock to investors, and the country’s unemployment rate fell to 4.1%, the lowest since March and significantly lower than the market’s projections. In addition to this, the NFP Employment Change read 35,000 higher than expectations. Higher economic and employment data can justify a higher oil output and keep prices high.


On the other hand, the economy and its outlook will significantly depend on global trade policy. Currently, investors look for confirmation on which countries will see higher tariffs imposed. The current deadline is July 9th. If the policy change triggers a bearish market, the price of Oil is likely to fall.


Lastly, another factor which investors are contemplating is the ability of Iran to enrich and produce nuclear weapons. According to the Pentagon, the recent attacks on Iran set back the nuclear program by 6-12 months. Also, most experts believe the US, Israel and Iran will not be able to make an agreement on the country’s nuclear policy. As a result, is the conflict simply going to resume at a later point? If so, the geo-political tensions could push prices higher as they did in June 2025.


Key Takeaway Points:


* OPEC+ is increasing oil output in July and August to regain market share, leading to an initial dip in prices.
* Despite the output increase, a potential for bullish momentum remains due to stronger-than-expected data, especially in the US employment sector.
* Upcoming global trade policy changes (July 9th deadline) could trigger a bearish market and cause oil prices to fall if new tariffs are imposed.
* Ongoing geopolitical tensions surrounding Iran's nuclear program could push oil prices higher again if conflict resumes.


Always trade with strict risk management. Your capital is the single most important aspect of your trading business.


Please note that times displayed based on local time zone and are from time of writing this report.


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Michalis Efthymiou
HFMarkets


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