Oil prices took a sharp dive on Monday, slumping to levels not seen since early 2021. Both Brent crude and West Texas Intermediate (WTI) closed lower, dropping over $1 each as global markets reacted to rising supply from OPEC+ and a cloudy outlook for demand. The continued tension in U.S.-China trade relations and broader market volatility have only added fuel to the fire, sending traders into risk-off mode.
Brent crude settled at $60.23 per barrel, down $1.06 or 1.7%, while WTI dropped by $1.16 or 2% to end the day at $57.13. These losses come on the heels of last week’s steep declines—Brent shed over 8% and WTI lost more than 7%, driven in part by signals from Saudi Arabia that it’s willing to weather a prolonged period of lower oil prices. That posture largely overshadowed any optimism around a potential breakthrough in U.S.-China tariff talks.
The trigger for this latest dip is OPEC+’s decision to ramp up production yet again. The alliance announced it would boost output by another 411,000 barrels per day in June, following a similar move in April. That means a total of 960,000 bpd will be added to the market over three months—a notable reversal of the deep cuts put in place since 2022.
There’s also some behind-the-scenes tension within the cartel. Reports suggest Saudi Arabia is pushing for a faster unwinding of the production cuts to pressure Iraq and Kazakhstan, who have been lagging on their quotas. If compliance doesn’t improve, we could see OPEC+ fully roll back its voluntary cuts by October, flooding the market with even more supply.
With the global demand outlook still uncertain, major financial institutions are now adjusting their forecasts. Barclays slashed its Brent projection for 2025 by $4, down to $66, while ING dropped its 2025 forecast from $70 to $65. The market seems to be bracing for a long stretch of lower oil prices—and unless demand rebounds or the group rethinks its strategy, that may just become the new normal.
Source: Business day