Oil Prices Decline After Saudi-led OPEC+ Agrees To Lift Output, Analysts Raise Oversupply Alarms

Crude oil prices fell on Monday, dragged by growing oversupply concerns as the OPEC+ oil producer group agreed to boost output in June.

On Saturday, the Organization of the Petroleum Exporting Countries and allies said they would raise production by 411,000 barrels compared to May levels, keeping healthy market fundamentals and low oil inventories in mind.

Brent crude futures fell 3.3% to $59.25 per barrel, while West Texas Intermediate crude futures slipped 3.4% to $56.29 per barrel at 1.39 am ET.

"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, according to a Reuters report.

OPEC’s latest move follows a similar unexpected April hike, bringing crude oil prices below $60 for the first time since 2021, amid uncertainty related to Donald Trump’s tariff policies.

Many industry experts believe that Saudi Arabia, the top oil exporter, is trying to punish overproducing group members by lowering oil prices.

“With this move, Saudi Arabia is seeking to punish lack of compliance, particularly from Kazakhstan, but also ingratiate with President Trump’s push for lower oil prices,” Rystad Energy analyst Jorge Leon reportedly said, according to a Bloomberg News report.

Trump is expected to visit the Middle East later this month to strengthen ties. He had earlier urged OPEC+ to lower oil prices.

Eight OPEC+ countries will meet on June 1 to discuss July production levels.

The United States Oil Fund (USO) has fallen 16.7% year to date, while the Energy Select Sector SPDR Fund is down 5.1%.

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