^{Source: Upstox}

Oil Prices Dive Amid OPEC+ Supply Surge: Market Worries Mount

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U.S. crude oil prices nosedived over 4% on Sunday evening after OPEC+ announced a significant boost in oil output for the second straight month, intensifying fears of a global supply glut at a time when demand is already under pressure from geopolitical tensions and economic uncertainty.

OPEC+ Ramps Up Output Again

In a surprise weekend decision, OPEC+—a coalition led by Saudi Arabia and Russia—committed to increasing crude oil production by 411,000 barrels per day (bpd) in June 2025. This follows a similar output hike in May, bringing the total planned surge to over 822,000 bpd in just two months.

The new production target significantly exceeds Wall Street expectations. Goldman Sachs had forecast only a 140,000 bpd rise for June, making the actual figure nearly three times higher than anticipated.

This aggressive ramp-up is aimed at regaining market share, but it has sent shockwaves through energy markets concerned about softening demand.

Market Reaction: Prices Plummet

Shortly after trading resumed on Sunday:

• West Texas Intermediate (WTI) crude fell by $2.49, or 4.27%, to $55.80 per barrel.
• Brent crude, the global benchmark, declined $2.39, or 3.9%, settling at $58.90 per barrel.

Oil prices are now down more than 20% year-to-date, reflecting the sharpest drop in the sector since 2021.

Economic Pressures and Tariff Fears

Adding to oil market woes are rising fears of a global economic slowdown. U.S. President Donald Trump’s recent tariff escalations—especially on Chinese and Mexican imports—have raised alarms over a potential recession, which could drastically curb oil demand.

Investors are increasingly concerned that the dual pressures of weakening global consumption and rapidly increasing supply may send crude into a prolonged bear market.

Impact on the Energy Sector

The price downturn is already hitting upstream exploration and production activities. Oilfield services giants like Baker Hughes and SLB (formerly Schlumberger) have signaled that 2025 could see a pullback in capital spending.

“The prospects of an oversupplied oil market, rising tariffs, uncertainty in Mexico, and activity weakness in Saudi Arabia are collectively constraining international upstream spending levels,” said Baker Hughes CEO Lorenzo Simonelli during an April 25 earnings call.

Even the oil supermajors are not immune:

• Chevron and ExxonMobil both reported year-over-year declines in Q1 earnings due to the downward trend in crude prices.

Analyst Forecasts: Where Prices Head Next

According to updated projections from Goldman Sachs, average prices in 2025 are expected to hover around:

• $59 per barrel for U.S. crude
• $63 per barrel for Brent crude

These figures mark a significant downward revision from earlier projections and reflect persistent concerns around OPEC+ strategy and geopolitical instability.

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With OPEC+ determined to flood the market with additional supply, and global economic signals flashing yellow, the oil market is bracing for a period of heightened volatility. Unless demand rebounds or geopolitical tensions ease, oil prices may continue to face downward pressure throughout the second half of 2025.

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