Oil prices surge on supply disruptions

[WORLD] Oil prices surged nearly 3% on Monday due to a mix of supply disruptions and market expectations. Brent crude closed at $64.63 per barrel, while U.S. West Texas Intermediate reached $62.52. Major contributors included the Canadian wildfires that forced oil sands operators in Alberta to halt production, temporarily taking about 7% of Canada’s oil output offline.

Beyond Canada, global factors also boosted prices. The U.S. dollar weakened amid concerns over new Trump-era tariffs, making dollar-priced oil cheaper for non-U.S. buyers. Additionally, geopolitical tensions flared after Ukrainian drone strikes on Russia, while ongoing but uncertain Iran-U.S. nuclear negotiations added further market anxiety.

On the production side, OPEC+ stuck to its plan to raise output by 411,000 barrels per day (bpd) in July, despite speculation they might accelerate increases. Analysts from Goldman Sachs and Morgan Stanley expect similar monthly boosts to continue, potentially adding up to 2.2 million bpd by October. Still, some market watchers were surprised OPEC+ didn’t move more aggressively to expand supply, fueling short-term price spikes.

Implications for Businesses, Consumers, and Policy

For businesses, especially those in energy-intensive sectors, the combination of tight supply and rising prices signals potential cost pressures heading into the summer. Airlines, manufacturers, and logistics firms may need to brace for higher fuel bills, which could erode profit margins or force price adjustments downstream.

For consumers, elevated oil prices often trickle into gasoline and heating costs, adding to inflationary pressures already amplified by global uncertainties. A weaker U.S. dollar may further complicate purchasing power dynamics, particularly for imported goods, contributing to broader economic unease.

On the policy front, governments face tough balancing acts. Energy-importing countries might need to rethink fuel subsidies or strategic reserves, while OPEC+’s careful quota management reflects its intention to regain market control without triggering oversupply. Simultaneously, ongoing geopolitical events, from Ukraine to Iran, keep energy diplomacy tightly intertwined with security concerns.

What We Think

The latest oil price movements highlight how tightly interconnected local disruptions and global markets have become. “The wildfires in Alberta are now starting to seep in,” sums up how fast natural events can ripple through global supply chains. While OPEC+’s steady production increases suggest a methodical approach, markets clearly remain hypersensitive to perceived underproduction or geopolitical risks.

We believe businesses should watch for continued volatility, not only because of supply-demand fundamentals but also due to political and environmental shocks. Consumers, too, will likely feel the squeeze at the pump and in household budgets. From a policy perspective, this is a reminder that energy resilience strategies—diversification, reserves, diplomacy—are more essential than ever.

In the coming months, the real test will be whether OPEC+’s gradual output boosts can keep pace with summer-driven demand without reigniting fears of inflation or energy insecurity. Markets are signaling that anything less than bold, clear actions will keep prices jumpy and nerves high.