SINGAPORE: Oil prices fell more than 1 per cent on Monday after OPEC+ announced a bigger-than-expected increase in production for August, raising concerns about a possible oversupply.
Brent crude futures were down 80 cents, or 1.2 per cent, at $67.50 a barrel by 0010 GMT. US West Texas Intermediate (WTI) crude dropped $1.32, or 2 per cent, to $65.68.
The oil producers’ group, known as OPEC+, said on Saturday it would boost output by 548,000 barrels per day (bpd) in August. The increase marks a significant jump from the 411,000 bpd monthly hikes approved for May, June and July, and far above the 138,000 bpd added in April.
Analysts said the move signals growing competition for market share, even at the risk of lower prices. “The increased production clearly represents a more aggressive competition for market share and some tolerance for the resulting decline in price and revenue,” said Tim Evans of Evans Energy in a note.
OPEC+ pointed to steady global economic growth and solid market fundamentals, including low oil inventories, as justification for raising supply.
According to analysts at RBC Capital, led by Helima Croft, the decision is expected to bring back nearly 80 per cent of the 2.2 million bpd in voluntary cuts previously pledged by eight OPEC members. However, they noted that actual increases so far have fallen short of planned levels, with most of the extra supply coming from Saudi Arabia.
In a further sign of confidence in demand, Saudi Arabia raised the official selling price of its Arab Light crude for Asian buyers in August to the highest level in four months.
Looking ahead, analysts at Goldman Sachs expect OPEC+ to announce a final output increase of 550,000 bpd for September when the group meets again on August 3.
Separately, US President Donald Trump said on Sunday that Washington is close to finalising several trade deals and will inform other countries about new tariff rates by July 9. The updated rates are expected to take effect on August 1.
Read next: OPEC+ to hike oil output to 548,000 bpd in August