Oil prices fell sharply on Monday following OPEC+’s decision to accelerate production increases despite dwindling demand amid rising economic uncertainties.
Brent crude oil, against which Nigerian oil is priced, declined by $2.21, or 3.61% to $59.08 per barrel in early Asian trading, the lowest price level since April 9 while the U.S. West Texas Intermediate (WTI) also dropped by $2.29, or 3.93% to $56.00 per barrel.
The price slump came after the coalition of oil-producing nations, OPEC+, announced it would raise production by an additional 411,000 barrels per day (bpd) in June. This is the second consecutive month of accelerated output and brings the total increase across April, May and June to 960,000 bpd or nearly 44% of the 2.2 million bpd in voluntary cuts implemented since 2022.
The increase in output is seen as part of an internal enforcement strategy with sources indicating that Saudi Arabia is pressing for the rollback of cuts in response to non-compliance by member countries.
The group has signaled that if compliance does not improve, the remaining voluntary curbs may be phased out entirely by the end of October.
Analysts have responded by revising their price forecasts downward.
Barclays lowered its Brent crude forecast for 2025 by $4 to $66 per barrel and for 2026 by $2 to $60 per barrel while ING analysts also cut their 2025 estimate to $65 from an earlier $70 on an anticipated deeper surplus in the global oil balance over the next year.
“The decision by OPEC+ to continue easing supply constraints adds considerable weight to market concerns about weakening fundamentals,” said Amarpreet Singh, an analyst at Barclays.
He noted that while U.S. oil output growth may moderate, the net effect of increased OPEC+ supply is expected to raise global output by 290,000 bpd in 2025.
Over the weekend, Israeli Prime Minister Benjamin Netanyahu vowed to respond to a missile fired by the Tehran-backed Houthi group that landed near Ben Gurion Airport.
Iran’s Defence Minister Aziz Nasirzadeh warned of retaliation if Iran is attacked by either Israel or the United States, potentially adding volatility to energy markets already under pressure.
As supply-side risk intensifies and the demand outlook remains unclear, the near-term direction of oil prices may be shaped by OPEC+’s production strategy, U.S. shale dynamics, and geopolitical developments across key regions.
