Oil prices fell by more than 1% on Monday following OPEC+’s weekend decision to accelerate production increases. The move has raised concerns about oversupply and an uncertain demand outlook.
By 09:46 GMT, Brent crude futures had dropped 87 cents (1.42%) to $60.42 per barrel, while U.S. West Texas Intermediate (WTI) crude fell 92 cents (1.58%) to $57.37 per barrel.
Both crude benchmarks opened at their lowest levels since April 9. OPEC+ announced plans to raise output in June by 411,000 barrels per day (bpd), marking the second consecutive monthly increase.
Total production hikes for April, May, and June will amount to 960,000 bpd. This represents a 44% rollback of the 2.2 million bpd in voluntary cuts implemented since 2022.
Nigeria may face a revenue shortfall of up to ₦19.6 trillion if the current trend continues through 2025.
OPEC+ sources say the cartel may fully reverse those cuts by October unless member nations like Iraq and Kazakhstan improve compliance with quotas.
Saudi Arabia is reportedly pushing for faster production increases, aiming to penalize countries that have failed to meet their agreed limits.
“The production increase, instigated by Saudi Arabia, is as much about challenging U.S. shale supply as it is about disciplining members who benefited from high prices while ignoring production limits,” said Ole Hansen, an analyst at Saxo Bank.
Price Outlook and Market Reaction
The prospect of increased supply has already weakened the Brent futures curve. The premium between the front-month contract and the six-month delivery narrowed to 10 cents per barrel, down from 47 cents in the previous session.
At one point, the market briefly entered a contango phase—where future prices are higher than spot prices—for the first time since December 2023.
Following the OPEC+ decision, analysts revised their forecasts. Barclays lowered its 2025 Brent projection by $4 to $66 per barrel, while ING adjusted its estimate from $70 to $65 per barrel.
“The oil market is grappling with major demand uncertainties amid global tariff risks. This shift in OPEC+ policy only adds to supply-side concerns,” said ING analysts led by Warren Patterson.
Adding to bearish sentiment, Vortexa’s chief economist David Wech highlighted weak demand for refined fuel imports and growing fears of a recession.
“Since mid-February, global crude inventories have increased by about 150 million barrels, both in onshore storage and tankers at sea,” he noted.
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