(London) Oil prices widened their losses on Tuesday, in the wake of the OPEC+ meeting on Sunday, interpreted by investors as the prospect of an increase in supply to come, which could lead to a surplus market.
Around 6:30 a.m., the price of a barrel of Brent from the North Sea, for delivery in August, fell 1.88% to $76.89.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in July, lost 2.18% to $72.60.
The two crude benchmarks were at their lowest level since February.
Following Sunday’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies in the OPEC+ alliance, “the announcement of a gradual reversal of voluntary reductions (in production, Editor’s note) was the main culprit » of the plunge in prices, summarizes Tamas Varga, analyst at PVM Energy.
Eight members (Saudi Arabia, the United Arab Emirates, Algeria, Iraq, Kuwait, Kazakhstan, Oman and Russia) will see the gradual end of the additional production cuts to which they had voluntarily submitted, renewed only until the end of September.
Furthermore, the United Arab Emirates obtained an increase in its official production quota of 300,000 barrels per day, which will be implemented gradually from January to September 2025.
In total, OPEC+ could reintroduce 2.5 mbd onto the market from this fall.
“Weak prices in the oil market suggest that market participants” fear “oversupply” in the market, says Carsten Fritsch of Commerzbank.
However, “OPEC+ expects a significant recovery in oil demand”, and if this “fails to recover, for example because the Chinese economy remains in difficulty, the planned increase in oil production would be compromised,” explains the analyst.