Global oil prices, which had topped $100 per barrel on expectations of the Strait of Hormuz reopening, have fallen to the high $60 range, the level before the Iran war. Concerns over a supply glut next year are growing as OPEC+, a coalition of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers, decided to increase production for a fifth consecutive month to recover losses from export disruptions.
According to Reuters, OPEC+ issued a statement on Saturday agreeing to raise its August daily production quota by 188,000 barrels. As a result, Brent crude traded at $71.61 per barrel intraday on Sunday, while August delivery West Texas Intermediate (WTI) traded at $68.30.
The decline in oil prices is attributed to a combination of reduced imports by China, the largest crude importer, expanded exports by non-Middle Eastern producers, and the International Energy Agency's (IEA) largest-ever release of strategic petroleum reserves. China's seaborne crude imports in June stood at 5.84 million barrels per day, the lowest in 10 years.
Oil-producing nations that depend on crude exports for revenue are being tempted to increase production despite falling prices. The United Arab Emirates (UAE) and Iraq are pursuing higher output and quota increases, while Russia, whose storage facilities were damaged by Ukrainian drone attacks, has been pushing crude out through exports, with shipments from its western ports reaching a record high last month.
However, some argue that actual production has not kept pace with the expansion plans. According to OPEC, OPEC+ daily production fell from 42.77 million barrels in February to 33.13 million barrels in May. Reuters energy columnist Clyde Russell predicted that it would take at least four quarters for the increase in Chinese imports to be reflected in the statistics.
Nvidia AI Server Rack Launch Setback... Asian Tech Stocks Plunge
Related stocks in Asian markets, including Korea, plunged simultaneously after foreign media reported that the launch of Nvidia's next-generation artificial intelligence (AI) server rack product has been delayed by more than a year due to manufacturing challenges.
According to CNBC on Saturday, semiconductor analysis firm SemiAnalysis noted in a report that the launch of the Kyber NVL144 rack-scale architecture, which will house Nvidia's Rubin Ultra chips, has been delayed to 2028, more than 12 months later than originally planned. Kyber is a next-generation AI rack designed to combine 144 Nvidia chips into one, functioning like a massive computer.
SemiAnalysis cited difficulties in mass-producing the multilayer printed circuit board (PCB), a key component, as the cause of the delay. This special PCB, which densely connects signals between chips and components, is difficult to mass-produce with current technology, according to the firm. The report also said that the optical communication connection of the NVSwitch, an ultra-high-speed interconnect linking graphics processing units (GPUs), has not been completed, and the plan to join two racks into the world's largest scale was also canceled.
If the report is true, the AI factory development plan emphasized by CEO Jensen Huang will be delayed by at least a year. On the other hand, there are also forecasts that demand to fill the shortfall will increase, bringing opportunities to the PCB industry in Korea and elsewhere, while giving competitors such as Google more room to move into the AI data center market.
On this news, Asian-related stocks such as Japan's Ibiden and Hong Kong's Kingboard Laminates Holdings, which count Nvidia as their largest customer, fell more than 10% intraday. Bloomberg analyzed that the launch delay outlook is raising uncertainty over Nvidia's next-generation roadmap, and Nvidia did not respond to the related report.
Pressure on NATO Over Defense Spending... U.S. Turns to Weapons Sales
The U.S. government will review member states' progress on defense spending increases and pursue billions of dollars in U.S. weapons sales contracts on the occasion of the North Atlantic Treaty Organization (NATO) summit held in Ankara, Turkey, on July 7-8. Analysts interpret this as President Donald Trump's attempt to link allies' increased defense spending to expanded weapons exports.
Matthew Whitaker, the U.S. ambassador to NATO, said Saturday that he would review the implementation of the commitment agreed at last year's Hague summit to spend 5% of gross domestic product (GDP) on defense by 2035. He pointed out that while Poland, the Nordic and Baltic states, and Germany are proceeding as planned, many other countries are lagging behind.
A senior U.S. government official said that significant weapons sales contracts are expected to be concluded during the summit. Earlier, U.S. Defense Secretary Pete Hegseth said at last month's NATO defense ministers' meeting that he would review the status of U.S. troop presence in Europe over six months.
NATO Secretary General Mark Rutte, meeting Trump at the White House on June 24, stressed that defense spending by Europe and Canada had exceeded $1 trillion.
Within the European Union (EU), led by France, voices calling for reduced dependence on the United States and independent military capabilities are also growing. Through its rearmament plan, the EU is pursuing 800 billion euros in defense spending and 150 billion euros in joint low-interest loans over four years.
On the occasion of the summit, Trump is scheduled to hold bilateral talks with Turkish President Recep Tayyip Erdogan, Ukrainian President Volodymyr Zelensky, and Syrian President Ahmed al-Sharaa, respectively.
