Oil prices tumbled more than $2 per barrel in Asian trading on Monday after the OPEC+ alliance agreed to intensify its output hikes, heightening fears of a global oil surplus amid shaky demand projections.
By 0653 GMT, Brent crude fell $2.21 (3.61%) to $59.08 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped $2.29 (3.93%) to $56.00 per barrel.
Both benchmarks hit their lowest levels since April 9 at the start of the session.
OPEC+ confirmed it would increase production by 411,000 barrels per day (bpd) in June, marking the second straight month of accelerated output growth.
According to Reuters calculations, this brings the combined increase for April through June to 960,000 bpd, or roughly 44% of the 2.2 million bpd cuts introduced since 2022.
“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,” stated Tim Evans, founder of Evans on Energy.
OPEC+ insiders told Reuters the group could fully reverse its voluntary cuts by October unless members like Iraq and Kazakhstan improve compliance with their quotas.
Saudi Arabia is reportedly pushing for faster reversal as a form of pressure on non-compliant countries.
Market indicators are also shifting. The 6-month Brent futures spread moved into a contango of 11 cents per barrel for the first time since December 2023, signalling that current oil is cheaper than future prices — typically a sign of excess supply.
In response, major banks have adjusted their forecasts. Barclays lowered its 2025 Brent forecast by $4 to $66 per barrel and its 2026 outlook by $2 to $60. ING revised its 2024 Brent forecast to $65, down from $70.
“We now expect OPEC+ to phase out the additional voluntary adjustments by October 2025 but also expect slightly slower U.S. oil output growth,” wrote Barclays analyst Amarpreet Singh.
Singh added that the new projections translate to an increase in global supply estimates by 290,000 bpd in 2025 and 110,000 bpd in 2026.
Meanwhile, ING’s Warren Patterson and his team warned that the oil market is likely to shift further into surplus next year.
“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,” they noted.