‘Bombshell’ OPEC+ output hike hits oil price
OPEC+ members raised production levels, thus lowering prices. REUTERS/Dado Ruvic/Illustration/File Photo
HONG KONG, China – Oil prices slumped on Monday after eight OPEC+ members announced a sharp increase in production, while Asian stocks treaded water in thin trade with major markets closed.
The output increase of 411,000 barrels a day announced by Saudi Arabia, Russia and six other members of the oil cartel on Saturday added to concerns about oversupply.
The price of crude has already been sliding because of fears of a global economic slowdown on the back of US President Donald Trump’s tariff onslaught.
READ: OPEC+ countries to open the oil taps despite price slump
“OPEC+ has just thrown a bombshell to the oil market,” Jorge Leon, analyst with Rystad Energy, told AFP.
“(Saturday’s) decision is a definitive message that the Saudi-led group is changing strategy and pursuing market share after years of cutting production,” he added.
On equity markets, Tokyo was closed for a holiday along with Hong Kong and mainland China. Taiwan edged lower while the Jakarta Composite Index gained.
The Australian dollar gained against the US dollar after Prime Minister Anthony Albanese’s election victory on Saturday, while the S&P/ASX 200 fell almost one percent.
Wall Street stocks concluded a strong week on a winning note Friday, notching solid gains on good US jobs data and improving sentiment about US-China trade talks.
In Europe, Paris and Frankfurt rose over two percent as markets brushed off official data showing eurozone inflation remained unchanged at slightly above the European Central Bank’s two-percent target.
London also gained ground, with mining and commodity stocks — sensitive to Chinese demand — performing particularly well amid optimism for the potential Beijing-Washington talks, according to analysts.
Stephen Innes at SPI Asset Management said that the “market (is) catching its breath before the next directional catalyst drops”.
This could come from progress — or an absence of it — in easing trade tensions between the United States and China or budget negotiations in Washington.
