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Oil prices fall below $60 a barrel as OPEC+ moves
Oil prices fell more than $1 a barrel on Monday after the OPEC+ alliance decided earlier this week to accelerate production increases, raising concerns about oversupply in a market with an uncertain demand outlook.
Brent crude futures fell $1.54, or 2.51%, to $59.75 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell $1.64, or 2.81%, to $56.61 a barrel.
Both contracts fell to their lowest levels since April 9 when trading began on Monday.
These moves extended losses after Brent crude fell 8.3% and WTI crude fell 7.5% last week due to increased supply concerns after Saudi Arabia indicated its ability to cope with prolonged low prices.
The OPEC+ alliance agreed to accelerate oil production increases for the second consecutive month, increasing production in June by 411,000 barrels per day.
According to Reuters calculations, the June increase by the eight OPEC+ producers will bring the combined increases for April, May, and June to 960,000 barrels per day, representing a 44% reduction from the combined 2.2 million barrels per day of cuts agreed upon since 2022.
"For producers outside OPEC+, who now account for nearly 60% of global oil supply, the market share gains could peak if these new barrels are fed into the market and prices move lower," said Peter McNally, an analyst at Third Bridge.
OPEC+ sources told Reuters that the alliance could completely reverse its voluntary cuts by the end of October if member countries do not improve compliance with their production quotas.
OPEC+ sources indicated that Saudi Arabia is pressuring OPEC+ to accelerate the end of previous production cuts to punish Iraq and Kazakhstan, the other two members of the alliance, for not adhering to production quotas.
