Oil prices continued their downward trend on Monday as investors assessed the impact of higher OPEC+ production starting in October and a sharp decrease in output from Libya. This comes amidst sluggish demand in China and the U.S., the two largest oil consumers in the world.
At 0108 GMT, Brent futures dropped 57 cents to $76.36 a barrel, while U.S. West Texas Intermediate crude fell 50 cents to $73.05 a barrel.
Last week, Brent saw a 0.3% decline and WTI dropped by 1.7%.
OPEC+ members are moving forward with their planned oil output increase for October, with eight members scheduled to raise output by 180,000 barrels per day. This decision is part of a strategy to gradually reverse the 2.2 million bpd output cuts while maintaining other reductions until the end of 2025.
Concerns are growing about OPEC’s decision to raise output next month, with analysts suggesting that the move will likely depend on the price of WTI being closer to $80 than $70.
Meanwhile, in Libya, the Arabian Gulf Oil Company has resumed production to meet domestic demand but exports remain suspended due to ongoing conflicts, leading to disruptions in the country’s oil supply.
Both Brent and WTI have seen losses for two consecutive months, driven by economic challenges in China and the U.S., despite geopolitical tensions in the Middle East.
Recent data shows a slowdown in oil consumption in the U.S. in June, signaling the lowest seasonal levels since the onset of the pandemic in 2020.
Analysts predict a downside risk to growth in 2025, citing economic pressures in China and the U.S. They believe OPEC may need to delay the phase-out of voluntary production cuts in order to support higher prices.
According to Baker Hughes, the number of active U.S. oil rigs remained unchanged at 483 last week.
Overall, the combination of increased OPEC+ production, Libyan supply disruptions, and weak demand in key markets like China and the U.S. is putting downward pressure on oil prices. Investors and consumers should closely monitor these developments as they can have significant implications for their finances and the broader economy.
