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Oil prices extended declines on Monday after OPEC+ agreed to another large production hike in September, with concerns about a slowing economy in the US, the world's biggest oil user, adding to the pressure.
Brent crude futures fell 40 cents, or 0.57 per cent, to $69.27 a barrel by 0115 GMT while US West Texas Intermediate crude was at $66.96 a barrel, down 37 cents, or 0.55 per cent, after both contracts closed about $2.0 a barrel lower on Friday, according to Reuters.
The Organisation of the Petroleum Exporting Countries and their allies, known as OPEC+, agreed on Sunday to raise oil production by 547,000 barrels per day for September, the latest in a series of accelerated output hikes to regain market share, citing a healthy economy and low stockpiles as reasons behind its decision.
The move, in line with market expectations, marks a full and early reversal of OPEC+'s largest tranche of output cuts, plus a separate increase in output for the United Arab Emirates, amounting to about 2.5 million bpd, or about 2.4 per cent of world demand.
Analysts at Goldman Sachs expect that the actual increase in supply from the eight OPEC+ countries that have raised output since March will be 1.7 million bpd, or about 2/3 of what has been announced, because other members of the group have cut output after previously overproducing.
"While OPEC+ policy remains flexible and the geopolitical outlook uncertain, we assume that OPEC+ keeps required production unchanged after September," they said in a note, adding that solid growth in non-OPEC output would likely leave little room for extra OPEC+ barrels.
RBC Capital Markets analyst Helima Croft said: "The bet that the market could absorb the additional barrels seems to have paid off for the holders of spare capacity this summer, with prices not that far off from pre-tariff Liberation Day levels."
Still, investors remain wary of further US sanctions on Iran and Russia that could disrupt supplies. US President Trump has threatened to impose 100% secondary tariffs on Russian crude buyers as he seeks to pressure Russia into halting its war in Ukraine.
At least two vessels loaded with Russian oil bound for refiners in India have diverted to other destinations following new US sanctions, trade sources said on Friday, and LSEG trade flows showed.
However, two Indian government sources told Reuters on Saturday the country will keep purchasing oil from Russia despite Trump's threats.
Concerns about US tariffs impacting global economic growth and fuel consumption are also hanging over the market, especially after US economic data on jobs growth on Friday was below expectations.
US Trade Representative Jamieson Greer said on Sunday that the tariffs imposed last week on scores of countries are likely to stay in place rather than be cut as part of continuing negotiations.