Oil prices experienced a decline of more than $2 per barrel as OPEC+ announced intentions to augment oil production, which has sparked apprehensions regarding a possible surplus in supply. The group’s choice to expedite production increases for the second month in a row, with an addition of 411,000 bpd in June, reinforces anticipations of a changing global supply and demand equilibrium. Brent crude futures experienced a decline of $2.04 per barrel, representing a decrease of 3.33%, settling at $59.25 per barrel by 2240 GMT. Meanwhile, U.S. West Texas Intermediate crude was priced at $56.19 per barrel, down $2.10, or 3.60%. Both contracts reached their lowest levels since April 9 at Monday’s open following OPEC+’s decision to expedite oil production increases for the second consecutive month, with output set to rise by 411,000 barrels per day in June.

The increase in June from the eight will bring the total combined hikes for April, May, and June to 960,000 bpd, which signifies a 44% reversal of the 2.2 million bpd of various cuts that have been agreed upon since 2022, as per calculations by Reuters. “The May 3 OPEC+ decision to raise production quotas another 411,000 bpd for June adds to the market expectation that the global supply/demand balance is moving to a surplus,” Tim Evans, founder of Evans on Energy, stated in a note.

According to sources from OPEC+, the group may completely reverse its voluntary production cuts by the end of October should member compliance with production quotas fail to improve. Sources within OPEC+ indicate that Saudi Arabia is advocating for a quicker reversal of previous output reductions in order to penalize fellow members Iraq and Kazakhstan for their inadequate adherence to production quotas. Sources within OPEC+ indicate that Saudi Arabia is advocating for a more rapid unwinding of previous output cuts, aiming to penalize fellow members Iraq and Kazakhstan for their inadequate adherence to production quotas.

Barclays has revised its Brent forecast downward, adjusting it by $4 to $66 per barrel for 2025 and by $2 to $60 per barrel for 2026, attributed to the expedited phase-out by OPEC+, as noted by analyst Amarpreet Singh.

In the Middle East, tensions escalated as Israeli Prime Minister Benjamin Netanyahu pledged to respond to Iran following the missile launch by the Tehran-supported Houthi group, which struck in proximity to Israel’s primary airport. Iran’s Defence Minister Aziz Nasirzadeh stated on Sunday that Tehran would retaliate if the United States or Israel were to launch an attack.