Crude oil prices fell more than 2% at the start of trading in the European session on Monday, May 5. Both crudes lost nearly $3 at the opening bell after the OPEC+ decision, which was held early Saturday and approved a significant increase in production. Brent crude fell by about 2.20%, trading at $59.95 per barrel, while US crude (NYMEX) was trading at $56.88 per barrel, a decline of about 2.42%.
In a statement by OPEC and its non-OPEC allies, led by Russia, known as OPEC+, the organization announced that it would pump an additional 411 million barrels per day in June for the second consecutive month, after the group increased production by 411,000 barrels in May. The organization seeks to punish members that fail to comply with their quotas and are overproducing, such as Kazakhstan and Iraq. This latest increase by the group, along with the April and May cuts, will amount to 960,000 barrels of combined increases, or 44% of the total agreed-upon 2.2 million barrels of cuts since 2022. Consequently, market expectations have increased for a significant surplus this year, which will negatively impact crude prices in the coming period. Morgan Stanley lowered its crude price forecast following the decision to $62.50 per barrel for Brent crude in the third and fourth quarters, down $5 from its previous forecast, while Barclays lowered its Brent price forecast by $4 to $66 per barrel for the year.