Oil Prices Drop As OPEC+ Agrees To Increase Output

Oil prices recovered some losses on Monday but were still down after OPEC+ overcame internal differences and agreed to increase output. 

The oil cartel's decision sparked concerns about a crude surplus as COVID-19 infections continue to rise in many countries.

Brent crude was down 61 cents, or 0.8%, at $72.98 a barrel by 07:17 WAT, after falling to $72.35 earlier in the session. U.S. oil was down 66 cents, or 0.9%, at $71.15 a barrel, having slipped to $70.64 earlier.

On Sunday, OPEC+ ministers agreed to boost oil supply from August to cool prices that earlier this month climbed to the highest in around two and half years as the global economy recovers from the COVID-19 pandemic.

The group, which includes members of the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, agreed on new production shares from May 2022.

To overcome internal divisions, OPEC+ agreed on new production quotas for several members from May 2022, including the UAE, Saudi Arabia, Russia, Kuwait, and Iraq.

The group last year cut output by a record 10 million barrels per day (bpd) amid evaporation in demand due to the pandemic, prompting a collapse in prices with U.S. oil at one point falling into negative territory.

It has gradually brought back some supply, leaving it with a reduction of around 5.8 million bpd.