Global oil prices dropped sharply on Monday following an unexpected decision by OPEC+ to raise output, heightening fears of oversupply in an already jittery market. The move comes amid growing concerns that escalating trade tensions, particularly those triggered by U.S. President Donald Trump’s tariff-driven policies, could suppress global energy demand.
Over the weekend, Saudi Arabia, Russia, and six other OPEC+ members revealed plans to increase oil production by 411,000 barrels per day starting in June. This follows a similar output hike just a month ago, which had already contributed to a downward trend in crude prices.
The market reacted swiftly. Brent crude, the global oil benchmark, slid nearly 4% before trimming some of its losses, trading just under $60 a barrel around 0715 GMT.
According to a research note from Deutsche Bank, the announcement “marks a significant shift from the supply cuts that have been in place since 2022.” While some experts attribute the increase to U.S. pressure on OPEC to help bring prices down, particularly in light of renewed sanctions on Iran, others remain sceptical.
“The group’s official line is that market fundamentals are strong and inventories are low,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “But with the global economy under strain from a protracted trade war, the logic behind adding more supply isn’t so clear.”
Ozkardeskaya added that alternative explanations are circulating. Some speculate that Saudi Arabia is retaliating against fellow OPEC members who haven’t adhered to prior production curbs. Others suggest geopolitical motives, such as weakening Russia’s economy or squeezing U.S. shale producers to reclaim market dominance.
While the true rationale behind the OPEC+ decision remains murky, one thing is clear: the move has added fresh volatility to an already unsettled oil market.
Written By Queen Diana Story
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