By Giulia Petroni
Oil prices plunged after the Organization of the Petroleum Exporting Countries and its allies agreed to make a larger oil output hike for a second consecutive month in June despite weak prices and an uncertain demand outlook.
After a meeting held online Saturday, eight OPEC+ countries said they will increase output by 411,000 barrels a day next month--the equivalent of three monthly increments--citing low global inventories.
In early European trade on Monday, Brent crude dropped 2.5% to $59.77 a barrel, while West Texas Intermediate was down 2.8% to $56.68 a barrel. The benchmarks have lost around 20% so far this year, with traders now fearing the group's move could top the market into oversupply at a time when global trade tensions threaten to dampen economic growth and energy demand.
OPEC+'s June hike is part of a broader plan to gradually unwind production curbs totaling 2.2 million barrels a day. Last month, the group stunned the market by announcing an increase of 411,000 barrels a day for May--a step widely interpreted as an effort to pressure over-producing members such as Kazakhstan by pushing prices lower.
During the meeting, they also reiterated that gradual increases might be paused or reversed subject to evolving market conditions and confirmed their intention to compensate for any volume produced above quotas since January 2024.
The eight producers--namely Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman--said they would meet on June 1 to discuss July production levels.
Write to Giulia Petroni at giulia.petroni@wsj.com
(END) Dow Jones Newswires
May 05, 2025 03:28 ET (07:28 GMT)
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