Oil prices slumped on Monday after eight OPEC+ members announced a sharp increase in production, adding to fears of oversupply of crude.
In morning trade in Asia, West Texas Intermediate was down 3.8 per cent at $56.08 per barrel while Brent North Sea Crude slid 3.5 per cent at $59.17.
The price of OPEC basket of twelve crudes stood at $68,16 a barrel on Monday, compared with $68,74 the previous Friday, according to OPEC Secretariat calculations.
OPEC+ member countries announced on Saturday that they would increase oil production in June.
According to the statement obtained by Channels Television, Saudi Arabia, Russia, and six other members of the oil-producing countries will implement a production adjustment of 411,000 barrels a day in June, up from May’s 137,000 barrels.
The group said the decision was after the eight OPEC+ countries, which previously announced additional voluntary adjustments in April and November 2023 (Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman), met virtually to review global market conditions and outlook.
“In view of the current healthy market fundamentals, as reflected in the low oil inventories, and in accordance with the decision agreed upon on 5 December 2024 to start a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from 1 April 2025, the eight participating countries will implement a production adjustment of 411 thousand barrels per day in June 2025 from May 2025 required production level.”
The increase is equivalent to three monthly increments.
“The gradual increases may be paused or reversed, subject to evolving market conditions. This flexibility will allow the group to continue to support oil market stability. The eight OPEC+ countries also noted that this measure will provide an opportunity for the participating countries to accelerate their compensation.”
The eight countries reiterated their collective commitment to achieve full conformity with the Declaration of Cooperation, including the additional voluntary production adjustments that were agreed to be monitored by the Joint Market Monitoring Committee (JMMC) during its 53rd meeting held on April 3rd 2024.
They also confirmed their intention to fully compensate for any overproduced volume since January 2024.
The eight OPEC+ countries will meet on 1 June 2025 to decide on July production levels.
