Oil prices fell as OPEC+ accelerated production increase.
Oil prices witnessed a sharp decline during Monday's trading, influenced by the decision of the "OPEC+" alliance to accelerate the pace of increasing oil supply, alongside escalating geopolitical concerns in the region.
Brent crude futures dropped by $2.2 (equivalent to 3.6%), to reach $59.03 per barrel, while U.S. West Texas Intermediate crude fell by $2.3 (4.05%), to $55.93 per barrel.
Both contracts reached their lowest levels since April 9, following "OPEC+" approval to increase production for the second consecutive month.
The alliance decided to raise production by 411,000 barrels per day in June, bringing the total increases from April to June to 960,000 barrels per day, representing a 44% reduction from the original cuts of 2.2 million barrels per day agreed upon in 2022.
In this regard, Tim Evans, founder of "Evans Energy," commented in a note: "OPEC+'s decision on May 3 to increase production quotas by an additional 411,000 barrels per day for June enhances market expectations of the global supply and demand balance shifting to a surplus."
Reuters reported, citing sources within "OPEC+," that the group may completely cancel its voluntary cuts by the end of October if member countries do not adhere to the agreed production quotas. Sources indicated that Saudi Arabia is pushing to end the cuts faster as a punishment for Iraq and Kazakhstan for not complying with their quotas.
Furthermore, Barclays Bank lowered its Brent crude price forecast by $4 to $66 per barrel in 2025, and by $2 to $60 in 2026, due to "OPEC+" expediting plans to gradually phase out the cuts, as mentioned by analyst Amarpreet Singh in a research note.
At the same time, concerns about oil supply disruptions increased with rising tensions in the Middle East, as Israeli Prime Minister Benjamin Netanyahu vowed to respond to Iran after the Tehran-backed Houthi group launched a missile that landed near Israel's main airport.
Iran's Defense Minister, Brigadier General Amir Hatami, stated on Sunday: "Tehran will respond forcefully if attacked by the United States or Israel."
