Oil prices fell more than 1% on Monday after major oil producers, members of OPEC+ decided over the weekend to further speed up oil output hikes, spurring concerns about more supply coming into a market already clouded by an uncertain demand outlook.
OPEC+ includes the countries members of Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia.
Brent crude futures dropped by 90 cents, or 1.47%, to $60.39 a barrel by 1:20 p.m. GMT, while U.S. West Texas Intermediate crude was at $57.31 a barrel, down 98 cents, or 1.68%.
The downward moves compound losses after Brent shed 8.3% and WTI 7.5% last week on concerns of rising supply after Saudi Arabia signalled it could cope with a prolonged lower price environment. That offset optimism on the demand side that U.S.-China tariff talks could occur, Saxo Bank analyst Ole Hansen said.
OPEC+ agreed on Saturday to accelerate oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day (bpd).
The June increase from the eight producers in the OPEC+ group will take the total combined hikes for April, May and June to 960,000 bpd, representing a 44% unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to Reuters calculations.
The group could fully unwind its voluntary cuts by the end of October if members do not improve compliance with their production quotas, OPEC+ sources told Reuters.
OPEC+ sources have said Saudi Arabia is pushing OPEC to speed up the unwinding of earlier output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas.
"The production increase, instigated by Saudi Arabia, is as much about challenging U.S. shale supply as it is to penalize members that have benefited from higher prices while flouting their production limits," Saxo Bank's Hansen said.
Barclays and ING have also lowered their Brent crude forecasts following the OPEC+ decision.
Barclays reduced its Brent forecast by $4 to $66 a barrel for 2025 and by $2 to $60 for 2026, while ING expects Brent to average $65 this year, down from $70 previously.
"The oil market has been dealing with significant demand uncertainty amid tariff risks. This change in OPEC+ policy adds to uncertainty on the supply side," ING analysts led by Warren Patterson said in a note.
Widespread recession fears and weak refined fuel import demand are also weighing on oil prices, said Vortexa's chief economist David Wech, adding that since mid-February the data analytics firm had noted an approximate 150 million barrel build in global crude stocks in onshore tanks and on tankers at sea.
