Oil prices extended their decline as outsiders worried about the outlook for demand and strong supply.
OPEC+ (OPEC+) announced plans to take back some production cuts as early as October. As outsiders worried about demand prospects and strong supply, the decline in oil prices widened. The Saudi Ministry of Energy said on Sunday after the OPEC+ weekend meeting that production restrictions will continue to be fully implemented in the third quarter and then gradually lifted over the next 12 months. The price of Brent crude oil fell below $81 per barrel, falling for the fourth day in a row, and the price of WTI crude oil was close to $77 per barrel.
The agreement aims to continue to support oil prices while easing production restrictions. Some member states, such as the UAE, are annoyed by these restrictions as they seek to increase production levels. Most market observers had predicted that production reduction measures would continue until the end of this year.
Vandana Hari, founder of Vanda Insights in Singapore, said: “The market did not anticipate that production cuts will be lifted after October. On the positive side of OPEC+, the agreement should help maintain cohesion. The continuation of unbalanced cuts over time will be a source of friction.”
Oil prices fell last month, partly due to continuing concerns about the outlook for global demand. The spot spread for Brent crude oil fell to a bearish positive spread structure last week, and the fuel market has been showing signs of weakness. Since this year, crude oil futures prices have remained at a high level after geopolitical tension in places such as the Middle East and Ukraine raised concerns about supply. As the war in Gaza enters its eighth month, Israel has delayed a cease-fire plan proposed by US President Joe Biden.