Oil prices declined on Monday after OPEC+ agreed to increase production targets starting in August, while exports from major producers through the Strait of Hormuz continue to recover, potentially boosting global supply.

Brent crude futures fell 41 cents, or 0.57%, to $71.71 per barrel by 09:42 GMT after closing 0.45% higher on Friday.

US West Texas Intermediate crude slipped 37 cents, or 0.54%, to $68.32 per barrel. There was no official settlement for US crude on Friday due to the closure of US markets ahead of the Independence Day holiday.

Both benchmarks posted relatively limited movements last week following several weeks of declines, as investors continued to monitor talks between the United States and Iran regarding the future of shipping through the Strait of Hormuz, while also tracking the recovery of Gulf oil exports.

OPEC+ increases production targets

The OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries and its allies led by Russia, agreed on Sunday to raise production targets by 188,000 barrels per day starting in August, following similar increases implemented in June and July.

However, much of the planned increase has remained largely theoretical due to the US-Israeli conflict with Iran, which led to the closure of the Strait of Hormuz to tanker traffic from several major OPEC producers, including Saudi Arabia, Kuwait, and Iraq, limiting their ability to increase exports.

Tamas Varga, analyst at PVM Associates, said producers are "selling into a falling market, which offers little hope for an immediate price recovery," adding that lower oil prices could eventually stimulate demand.

Gulf exports recovering

Data showed Gulf oil exports increased by more than 3 million barrels per day in June compared with May, surpassing 10 million barrels per day. However, exports remain roughly 40% below levels seen before the outbreak of the conflict.

ANZ Bank said it expects global oil demand to contract by approximately 1.5 million barrels per day in 2026, citing a sharper-than-expected economic slowdown during the second quarter. According to preliminary data, annual demand declines could reach as much as 4 million barrels per day during that period.

The bank added that demand losses are expected to moderate in the second half of the year as supply conditions improve and part of the deferred demand returns to the market.

Signs of growing spot supply

Trading sources reported that the Abu Dhabi National Oil Company (ADNOC) sold around 16 million barrels of UAE crude at deeper discounts through its fifth spot tender since June, signaling growing spot market supply.

Separately, the Ukrainian military announced on Monday that it carried out overnight strikes targeting oil refineries in Russia's Yaroslavl and Leningrad regions.

Silver prices fell nearly 1.5% in European trading on Monday, starting the new week on a weaker note and retreating from a two-week high reached earlier during Asian trading. The decline was driven by profit-taking and corrective selling, as well as pressure from a stronger US dollar in the foreign exchange market.

Investors are awaiting key US services sector data later today, while the minutes of the Federal Reserve’s monetary policy meeting, due on Wednesday, are expected to provide fresh clues about the outlook for US interest rates.

The Price

• Silver prices fell about 1.5% to $61.56 per ounce, down from an opening level of $62.38, after reaching an intraday high of $63.27, the highest level since June 23.

• At Friday’s settlement, silver gained 2.3%, marking its fourth consecutive daily advance, supported by weaker US Treasury yields and a softer dollar.

• The white metal rose 5.5% last week, posting its first weekly gain in three weeks and its strongest weekly performance since May, as expectations for further US interest rate hikes eased.

US dollar

The US Dollar Index rose more than 0.2% on Monday, extending gains for a second consecutive session as the greenback continued to recover from a two-week low, reflecting broader strength against a basket of major and secondary currencies.

Several analysts maintained a positive outlook for the US dollar, suggesting it could appreciate by a modest 2%–3% during the second half of 2026.

US interest rates

• According to the CME FedWatch Tool, markets currently price a 76% probability that the Federal Reserve will leave interest rates unchanged at its July meeting, while the probability of a 25-basis-point rate hike stands at 24%.

• For December, markets assign a 24% probability to unchanged rates and a 76% probability to a 25-basis-point increase.

• Investors are awaiting today's ISM report on US services sector activity for June, which could provide important insight into the strength of economic activity and influence interest rate expectations.

• On Wednesday, the Federal Reserve will release the minutes of its first monetary policy meeting under Chairman Kevin Warsh, which are expected to offer clearer guidance on the path of US interest rates for the remainder of the year.

The US dollar traded near its lowest levels in almost two weeks on Monday as investors continued to scale back expectations for Federal Reserve interest rate hikes this year following weak US employment data. Meanwhile, the Japanese yen remained close to its weakest levels in four decades as markets monitored the possibility of official intervention in the foreign exchange market.

The euro held near $1.1435, close to a two-week high, while sterling traded at $1.3351. The US Dollar Index, which measures the greenback against a basket of six major currencies, was little changed at 100.9 in early trading.

Elsewhere, the Japanese yen traded at ¥162.32 per dollar, close to last week's 1986 low of ¥162.84, after a sharp rally in the Japanese currency on Thursday fueled speculation about possible official intervention.

The euro also traded near a two-week high at $1.1416, while sterling stood at $1.3342 and the Dollar Index was at 101.08.

The South Korean won, meanwhile, weakened on the first day of round-the-clock domestic spot trading, falling to 1,531 won per dollar.

Yen remains in focus

The yen continued to be the main focus in currency markets as it hovered near 40-year lows. Expectations of potential Japanese government intervention kept traders cautious, although many analysts questioned whether intervention alone could reverse the broader trend.

Moh Siong Sim, currency strategist at OCBC Bank, said markets remain focused on the risks associated with the Federal Reserve's hawkish policy stance, which continues to weigh on the yen. However, the possibility of Japanese intervention has limited further downside pressure on the currency.

"In the near term, I expect the yen to remain under pressure," he said.

Sim added that investors increasingly fear Japanese authorities may have abandoned their traditional strategy of signaling intervention in advance and instead adopted a more targeted approach aimed at squeezing speculators and raising the cost of betting against the yen.

Ben Bennett, Head of Asia Investment Strategy at L&G Asset Management, said he expects Japanese authorities to intervene if currency volatility rises further. However, he emphasized that broader exchange rate trends are driven primarily by fundamental factors, including Japan’s expansionary fiscal policy and the wide interest rate differential with the United States.

"I don't think intervention will change that trend," Bennett said.

Dollar catches its breath

The US dollar struggled to recover after posting its worst weekly performance since April, following data showing a sharp slowdown in US job growth during June, prompting investors to reduce expectations for further rate hikes.

Market attention is now turning to the minutes of the Federal Reserve's June meeting, due on Wednesday, for additional clues about policymakers' views on the future path of interest rates.

Investors are also awaiting US inflation data scheduled for release next week, which is widely seen as the next major catalyst for monetary policy expectations.

Analysts at Commonwealth Bank of Australia said the meeting minutes could be shorter and less detailed than usual, reflecting Federal Reserve Chairman Kevin Warsh's view that the central bank has historically provided too much forward guidance to markets.

Sim expects the US dollar to appreciate by around 2% to 3% by the end of the year but believes the currency may remain range-bound in the near term as some investors return to carry trade strategies that benefit from interest rate differentials.

"I expect the dollar to trade sideways in the near term," he said.

Gold prices fell in European trading on Monday for the first time in four sessions, pulling back from a two-week high reached earlier during Asian trading as profit-taking and corrective selling emerged. The precious metal also came under pressure from a stronger US dollar against a basket of major global currencies.

With expectations for additional US interest rate hikes easing recently, investors are now awaiting fresh signals this week from the minutes of the Federal Reserve’s first policy meeting under Chairman Kevin Warsh, which could provide further clues about the direction of US monetary policy.

The Price

• Gold prices fell 0.75% to $4,144.94 per ounce, down from an opening level of $4,175.01, after reaching an intraday high of $4,203.06, the highest level since June 22.

• At Friday’s settlement, gold gained 1.3%, marking its third consecutive daily advance, supported by weaker US Treasury yields and a softer dollar.

• Gold rose 2.1% last week, posting its first weekly gain in five weeks and its strongest weekly performance since May, driven by reduced expectations for further US rate hikes this year.

US dollar

The US Dollar Index rose more than 0.2% on Monday, extending gains for a second straight session as the greenback continued to recover from a two-week low, reflecting broader strength against a basket of major and secondary currencies.

As a stronger dollar makes dollar-denominated gold more expensive for holders of other currencies, it tends to reduce demand for the precious metal.

Several analysts maintained a constructive outlook for the US dollar, suggesting it could appreciate by a modest 2%–3% during the second half of 2026.

US interest rates

• According to the CME FedWatch Tool, markets currently price a 76% probability that the Federal Reserve will leave interest rates unchanged at its July meeting, while the probability of a 25-basis-point rate hike stands at 24%.

• For December, markets assign a 24% probability to unchanged rates and a 76% probability to a 25-basis-point increase.

• Investors are awaiting today’s ISM services sector report for June, which could offer additional insight into the strength of the US economy.

• On Wednesday, the Federal Reserve will release the minutes of its first monetary policy meeting under Chairman Kevin Warsh, which are expected to provide clearer guidance on the outlook for US interest rates this year.

Gold outlook

• Tim Waterer, Chief Market Analyst at KCM Trade, said gold has regained some stability as markets scale back expectations for further rate hikes. While easing yield pressures provides support, the strength of the US dollar continues to cap gains in the precious metal.

• JPMorgan said demand from key gold-buying sectors is unlikely to be as strong as previously expected, which could limit the metal’s upside this year.

• The bank forecasts gold prices to average around $4,300 per ounce in the third quarter before rising toward $4,500 per ounce in the fourth quarter.

SPDR Gold Trust

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Friday at 1,001.37 metric tons, the lowest level since September 24, 2025.