Oil prices dropped sharply on Monday as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) announced an accelerated pace in production hikes, raising fears of a looming supply surplus in a market already grappling with demand uncertainty.
Brent crude futures slumped by $2.21, or 3.61%, to $59.08 a barrel as of 06:53 GMT, while U.S. West Texas Intermediate (WTI) crude fell $2.29, or 3.93%, to $56.00. Both benchmarks opened at their lowest levels since April 9.
The market reaction follows OPEC+’s decision to increase output by 411,000 barrels per day (bpd) in June—the second consecutive month of accelerated hikes. This move brings the total increase for April through June to 960,000 bpd, effectively reversing 44% of the 2.2 million bpd in voluntary cuts agreed upon since 2022, according to Reuters calculations.
Analysts say the ramped-up supply could tilt the global oil balance into surplus.
“The May 3 OPEC+ decision to raise production quotas further for June adds to growing expectations that supply will outstrip demand,” said Tim Evans, founder of Evans on Energy.
Sources within OPEC+ indicated that the group could fully unwind its voluntary production cuts by October, particularly if members continue to fall short of compliance targets. Saudi Arabia is reportedly leading calls to accelerate the rollback as a punitive measure against Iraq and Kazakhstan over quota violations.
The widening supply outlook has also flipped the six-month Brent price spread into contango—where future contracts are more expensive than current prices—for the first time since December 2023. The 11-cent contango reflects market sentiment that near-term supply is more than sufficient.
In response, major financial institutions have revised their oil forecasts downward. Barclays cut its Brent crude estimate by $4 to $66 per barrel for 2025 and by $2 to $60 for 2026. ING analysts now project Brent to average $65 in 2024, down from an earlier estimate of $70.
Barclays also adjusted its global supply forecast upward, estimating an additional 290,000 bpd for 2025 and 110,000 bpd for 2026, factoring in the combined impact of increased OPEC+ output and modestly slower growth in U.S. production.
“The oil market is facing a double-edged uncertainty—demand concerns driven by trade tensions and a supply-side shake-up from OPEC+’s latest move,” noted ING’s Warren Patterson and his team.
The latest downturn marks one of the steepest monthly oil price declines since 2021, deepening volatility in global energy markets as investors weigh the implications of an increasingly fluid production policy.
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