Oil prices declined sharply on Monday after OPEC+ announced an accelerated production hike. The decision prompted concerns that supply may outpace demand, especially as global economic indicators remain mixed.
As of 09:46 GMT, Brent crude futures fell 1.42% to $60.42 per barrel, while West Texas Intermediate (WTI) crude slipped 1.58% to $57.37 per barrel. Both benchmarks hit their lowest levels since April 9.
The move follows the group’s plan to increase production in June by 411,000 barrels per day (bpd)—the second consecutive monthly hike. This brings the cumulative increase across April, May, and June to 960,000 bpd, according to Reuters data. That’s nearly 44% of the 2.2 million bpd in voluntary cuts agreed upon since 2022.
OPEC+ insiders say the Saudi-led push to unwind cuts is both a strategic response to non-compliant members like Iraq and Kazakhstan and a signal to counter U.S. shale producers amid slowing global demand.
Brent Futures Signal Market Weakness
The supply surge has already impacted the Brent crude futures curve, flattening the premium between short- and long-term contracts. The six-month Brent spread shrank to just $0.10 per barrel, down from $0.47 in the previous session.
Earlier Monday, the spread temporarily dipped into contango—a market structure where future prices are higher than current ones. This often reflects oversupply expectations and short-term weakness in demand.
Major banks have responded swiftly:
- Barclays cut its 2025 Brent forecast by $4 to $66 per barrel
- ING revised its 2024 forecast down to $65, from $70
These adjustments reflect growing consensus that prices will remain under pressure, especially if OPEC+ fully unwinds its cuts by October.
Demand Doubts Add to Price Pressure
Beyond supply dynamics, demand remains fragile. Analysts cite ongoing recession fears, weaker fuel import demand, and escalating trade tensions as major headwinds.
Vortexa reports that since mid-February, global crude inventories have surged by 150 million barrels, stored both onshore and aboard tankers. This build-up underscores a mismatch between supply and consumption.
Market Impact at a Glance:
- OPEC+ adds 411K bpd in June
- Brent and WTI down over 1%
- Brent futures curve flattens
- Global crude stockpiles up 150M barrels
Analysts warn that without a clear rebound in global demand, oil prices could remain under sustained downward pressure through the second half of 2025.
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