Oil prices dropped sharply on Monday after OPEC+ announced plans to ramp up production, heightening supply concerns amid an already fragile demand outlook.
International benchmark Brent crude fell by around 2.69%, trading at $59.66 per barrel at 10.09 am local time (0709 GMT), down from $61.31 at the previous session's close.
US benchmark West Texas Intermediate declined by about 2.82%, reaching $56.46 per barrel, compared to its prior session close of $58.10.
Eight OPEC+ nations, Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman, will boost oil production by 411,000 barrels per day (bpd) in June, compared to May levels, as part of a plan to gradually unwind voluntary output cuts, the group said Saturday following a virtual meeting.
Key producers Saudi Arabia and Russia are set to lead the increase, with analysts saying the move points to a significant rise in global oil supply over the coming months.
'The higher production hikes appear to be in response to a lack of compliance by some members of the group,' Daniel Hynes, a senior commodity strategist at the Australia and New Zealand Banking Group, said in a note.
He noted that the increase is also aimed at 'punishing overproducing nations, such as Kazakhstan and Iraq.'
'OPEC+ leader, Saudi Arabia, warned that it could amplify a historic shift in policy and deliver further production increases unless those nations fall in line,' he added.
Barclays revised its outlook for the group, projecting that OPEC+ will phase out voluntary cuts in just six months, down from an earlier estimate of 18 months. The shift reinforces expectations that global supply will expand further, placing downward pressure on prices.
Meanwhile, Israeli Prime Minister Benjamin Netanyahu threatened Sunday to respond against Yemen and Iran after a Houthi missile struck the grounds of Ben Gurion Airport in Tel Aviv, disrupting air traffic.
Netanyahu convened an emergency meeting to discuss more strikes, according to the Israeli Broadcasting Authority KAN.
'(US) President (Donald) Trump is absolutely right! Attacks by the Houthis emanate from Iran. Israel will respond to the Houthi attack against our main airport AND, at a time and place of our choosing, to their Iranian terror masters,' he wrote on X following the meeting.
Despite the Israeli prime minister's threats of further action against Iran, OPEC+'s decision to boost production has largely eased market fears over escalating tensions in the Middle East.
By Handan Kazanci
Anadolu Agency
energy@aa.com.tr