SINGAPORE – The move comes amid growing concerns over a potential economic slowdown in the United States, the world’s largest oil consumer, which is adding to the pressure.
Oil prices continued to decline today after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed to another significant increase in production in September, with growing concerns about a slowing economy in the United States, the world’s largest oil user, adding to the pressure.
Brent crude futures fell 40 cents, or 0.57 percent, to $69.27 a barrel, while U.S. West Texas Intermediate crude fell 37 cents, or 0.55 percent, to $66.96 a barrel after both contracts closed about $2 a barrel lower on Friday.
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OPEC+ agreed on Sunday to increase oil production by 547,000 barrels per day in September, the latest in a series of accelerated production increases to regain market share, citing a strong economy and low inventories as the reasons behind the decision.
Analysts at Goldman Sachs expect the actual increase in supply from the eight countries that have increased their production since March to be 1.7 million barrels per day, or about two-thirds of what was announced, because other members of the group have reduced production after previously overproducing.
“While OPEC+ policy remains flexible and the geopolitical outlook is uncertain, we assume OPEC+ will maintain its required production levels beyond September,” they said in a note, adding that strong growth in non-OPEC production is likely to leave little room for additional OPEC+ barrels.
Investors remain wary of further US sanctions on Iran and Russia, which could disrupt supplies. U.S. President Donald Trump has announced a 100 percent secondary tariff on buyers of Russian crude as part of his effort to pressure Russia to end its war in Ukraine. Trade sources said on Friday that at least two ships carrying Russian oil to refineries in India have diverted to other destinations following the new US sanctions, according to trade flow data from the London Stock Exchange Group.
