Oil prices saw a sharp decline at the start of the week, impacted by the OPEC+ decision to raise production for the second month in a row. The group increased supply by 411,000 barrels per day in June, bringing the total output increase since April to 960,000 barrels per day. This move reflects a shift in strategy by major producers toward gradually unwinding previous cuts, despite continued weakness in global demand.
Following the announcement, Brent crude dropped by more than $2 to reach $59.20 per barrel, while U.S. crude fell to $55.12. This decline was driven by investor concerns over a potential oversupply, amid economic indicators pointing to slowing global growth and weakening industrial and consumer demand for energy.
From a technical standpoint, the market structure shifted into a contango pattern, where Brent futures prices are now higher than near-term contracts — for the first time since December 2023. This curve change suggests that traders expect softer demand or rising inventories, echoing previous periods of supply gluts in the market.
In response to these developments, major financial institutions revised their oil price forecasts downward. Barclays lowered its Brent price estimates to $66 per barrel for 2025 and $60 for 2026, citing increased supply due to OPEC+ policy. The bank also anticipates that the voluntary production cuts will be fully phased out by October 2025 instead of mid-2026, which could add 390,000 barrels per day to OPEC output. Meanwhile, U.S. oil production is expected to slow by 100,000 barrels per day in 2025 and 150,000 barrels in 2026, potentially offsetting some of the additional supply from OPEC+.
Similarly, ING also reduced its 2024 Brent forecast from $70 to $65, noting that the market is heading toward a growing supply surplus amid significant uncertainty on the demand side, driven by both economic slowdown and geopolitical risks.
