Oil drops more than $2/bbl as OPEC+ accelerates output hikes
Oil prices fell more than $2 a barrel in early Asian trade on Monday as OPEC+ is set to further speed up oil output hikes, spurring concerns about more supply.
Brent crude futures dropped $2.04 a barrel, or 3.33%, to $59.25 a barrel by 2240 GMT while U.S. West Texas Intermediate crude was at $56.19 a barrel, down $2.10, or 3.60%.
Both contracts touched their lowest since April 9 at Monday's open after OPEC+ agreed to accelerate oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day (bpd).
The June increase from the eight will take the total combined hikes for April, May and June to 960,000 bpd, representing a 44% unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to Reuters calculations.
"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," Tim Evans, founder of Evans on Energy said in a note.
The group could fully unwind its voluntary cuts by the end of October if members do not improve compliance with their production quotas, OPEC+ sources told Reuters.
OPEC+ sources have said Saudi Arabia is pushing OPEC+ to accelerate the unwinding of earlier output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas.
Barclays lowered its Brent forecast by $4 to $66 a barrel for 2025 and by $2 to $60 a barrel for 2026 because of the accelerated phase out by OPEC+, analyst Amarpreet Singh said in a note.
Meanwhile, tensions flared in the Middle East after Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Iran for the Tehran-backed Houthi group firing a missile that landed near Israel's main airport.
Iran's Defence Minister Aziz Nasirzadeh said on Sunday that Tehran would strike back if the United States or Israel attacked.
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