U.S. Crude Oil Prices Slide Over 4% Following OPEC+ Decision to Boost Output

On Sunday, U.S. crude oil futures saw a sharp decline, experiencing a drop of more than 4%, as OPEC+ opted for a substantial increase in oil production for the upcoming month.

The price of U.S. crude dropped by $2.49 or 4.27%, bringing it down to $55.80 per barrel as trading commenced. Similarly, the international benchmark decreased by $2.39 or 3.9%, reaching $58.90 per barrel. These declines contribute to the more than 20% decrease in oil prices observed this year.

Led by Saudi Arabia, the eight-member alliance agreed to enhance production by another 411,000 barrels per day in June. This decision came on the heels of last month's unexpected agreement by OPEC+ to raise output by an equivalent volume.

The planned production boost for June overshoots Goldman Sachs' initial prediction, which was an increase of 140,000 barrels per day. In total, OPEC+ aims to introduce more than 800,000 additional barrels per day to the market over two months.

In April, oil prices witnessed the most significant monthly decline since 2021. Concerns over a recession sparked by U.S. trade policies, compounded by a swift increase in supply from OPEC+, have contributed to the apprehension about future demand.

Companies engaged in oilfield services, including exploration and production, foresee a decline in investment due to the current weak pricing environment.

CEO Lorenzo Simonelli from Baker Hughes remarked on April 25 during their first-quarter earnings call that multiple factors, including an overstocked oil market, escalating trade tariffs, uncertainties in Mexico, and reduced activity in Saudi Arabia, are together hindering global upstream investment.

The leading oil corporations reported a dip in their first-quarter profits compared to the corresponding period in 2024, primarily due to reduced oil prices.

Goldman Sachs projects that the average prices for U.S. crude and Brent will be $59 and $63 per barrel, respectively, for the remainder of the year.