Global oil prices took a steep hit in early Asian trading on Monday, falling to their lowest levels in nearly a month, as OPEC+ signaled a more aggressive approach to ramping up oil production.Â
The move has stirred anxiety across global energy markets, with investors increasingly wary of a supply glut when demand growth remains shaky due to macroeconomic uncertainty and trade tensions.
The international oil benchmark of Brent crude dropped by $2.21 or 3.61%, bringing the price down to $59.08 per barrel. U.S. West Texas Intermediate (WTI) crude followed suit, falling by $2.29 or 3.93% to settle at $56.00 per barrel. Both benchmarks reached their lowest points since April 9, reacting swiftly to the latest decision by the Organization of the Petroleum Exporting Countries and allies (OPEC+) to accelerate production increases.
For the second month in a row, OPEC+ has opted to boost output, announcing an additional hike of 411,000 barrels per day (bpd) for June. This means the bloc will have added 960,000 bpd over three months—April, May, and June—undoing 44% of the 2.2 million bpd of voluntary cuts implemented since 2022.
Market watchers see this rapid reversal of production restraints as a clear sign that OPEC+—and Saudi Arabia in particular—is pressuring member countries like Iraq and Kazakhstan to adhere more strictly to their output quotas. Saudi Arabia, known for its role as the de facto leader of the group, has reportedly been pushing for a faster rollback of cuts in response to weak compliance by some members.
Analysts say this move could flood the market with excess crude, especially if compliance issues persist and output increases continue at this pace. According to sources within OPEC+, if member nations fail to tighten compliance, the group may completely unwind its voluntary cuts by October this year.
Further compounding market pessimism, the Brent crude futures spread has flipped into contango—a market structure where oil for immediate delivery is cheaper than for future delivery. For the first time since December 2023, the six-month Brent spread showed a contango of 11 cents per barrel, signaling traders expect oil supplies to outpace demand in the near term.
This growing concern over surplus has already impacted price forecasts from major financial institutions. Barclays slashed its Brent price outlook by $4 to $66 per barrel for 2025 and lowered its 2026 forecast by $2 to $60 per barrel. ING similarly adjusted its expectations, now predicting Brent will average $65 in 2025, down from a prior estimate of $70.
Barclays analyst Amarpreet Singh noted that while OPEC+ is phasing out voluntary cuts, a slowdown in U.S. shale output may slightly offset the global supply surge. Nonetheless, Barclays has revised its supply projections upward by 290,000 bpd for 2025 and by 110,000 bpd for 2026.
ING’s analysts, led by Warren Patterson, echoed similar concerns. They expect the oil market to shift deeper into surplus territory throughout 2025, especially as uncertainties tied to global trade policies and tariffs continue to impact consumption trends. With the supply side now also becoming increasingly volatile, the oil market appears to be heading into a period of heightened instability.
The sharp fall in oil prices reflects deepening concerns about oversupply in the face of fragile global demand. As OPEC+ pushes forward with accelerated production hikes and compliance tensions simmer within the group, investors will be closely monitoring both supply-side behavior and macroeconomic indicators for cues on where oil markets are headed next.
