Oil prices tumbled to their lowest levels since early 2021 after OPEC+ confirmed plans to raise output again in June, compounding investor concerns about oversupply and slowing global demand amid escalating trade tensions and recession risks.
West Texas Intermediate (WTI) crude fell 2% to settle at US$57.13 per barrel on Monday, its weakest close since February 2021. Brent crude lost 1.7% to finish at US$60.23. Prices have dropped around 20% year to date, with April alone marking the worst monthly performance since 2021.
The latest drop followed OPEC+’s decision over the weekend to raise production by 411,000 barrels per day (bpd) in June—matching a similar increase agreed for May and nearly tripling Goldman Sachs’ forecast of 140,000 bpd. In total, the group will return over 800,000 bpd to global markets in just two months.
The move marks a sharp shift from the production cuts that defined OPEC+ strategy since 2022. While the group cited “healthy fundamentals and low inventories” as justification, analysts expressed scepticism about the timing.
“Rising output only worsens oversupply concerns,” said Swissquote analyst Ipek Ozkardeskaya. “So the real reason must be something else.”
Theories abound. Some suggest the increase is a political gesture aimed at US President Donald Trump, who has repeatedly pressured for lower oil prices and recently ramped up tariffs that many fear could spark a global recession. Others speculate the goal may be to undercut Russian finances or to push high-cost US shale producers out of the market.
Regardless of motive, the supply boost comes at a time of weakening demand. Trump’s widening trade war has amplified fears of an economic slowdown, with Goldman Sachs’ head of oil research Daan Struyven warning clients that “high spare capacity and high recession risk skew the risks to oil prices to the downside.”
Goldman has revised its 2025 WTI forecast down by US$3 to US$56 per barrel.
The selloff is already weighing on energy stocks and capital expenditure. Oilfield service providers Baker Hughes and SLB have warned of weaker upstream spending, especially in regions like Saudi Arabia and Mexico. Chevron and Exxon last week reported lower Q1 earnings, citing depressed prices.
“The prospects of an oversupplied oil market, rising tariffs, uncertainty in Mexico and activity weakness in Saudi Arabia are collectively constraining international upstream spending,” said Baker Hughes CEO Lorenzo Simonelli on April 25.
While some believe the Saudis may be punishing non-compliant OPEC members or seeking to reclaim market share, others caution that such moves could backfire—further destabilising prices in a fragile macroeconomic environment.
As of now, the rationale behind the production hike remains opaque. But with oil markets reeling and geopolitical uncertainty rising, traders are bracing for a volatile few months.
