Oil prices slump on Opec+ decision to accelerate production
Oil prices slumped sharply on Monday after the Opec+ alliance of oil-producing countries agreed to increase production for a second month in a row. Brent, the benchmark for two thirds of the world's oil, was down 3.65 per cent at 8.35am UAE time to $59.06 per barrel. West Texas Intermediate, the gauge that tracks US crude, sank almost 4 per cent to $55.99 a barrel. Oil prices have taken a hammering over the past few weeks, and both benchmarks were down about 17 per cent year-to-date, as of close on Friday. The Opec+ group of producers, led by Saudi Arabia and Russia, on Friday said it would add 411,000 barrels a day to the market next month. The announcement after an online meeting of the countries, which was brought forward from Monday, followed the larger-than-planned output rise, also of 411,000 bpd, for May. The group said it has taken the decision to increase crude output 'in view of the current healthy market fundamentals, as reflected in the low oil inventories'. The Opec+ decision follows the December 5 agreement to start a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments that started from April 1. 'The gradual increases may be paused or reversed subject to evolving market conditions. This flexibility will allow the group to continue to support oil market stability,' Opec said in the statement. However, the accelerated hike in the output, together with US trade tariffs that has dampened economic growth expectations, has clouded demand outlook for crude, dragging prices below $60 a barrel to a four-year low. 'Crude futures were back on a slippery slope early Monday in response to Saturday's decision by the Opec/non-Opec group of eight members to accelerate the phase-out of their production cuts for a second consecutive month,' Singapore-based oil markets consultancy Vanda Insights wrote in a note on its website. The group's combined output target for June, at 31.375 million bpd, is about 411,000 bpd higher than May and triple what had been planned in March, when the group laid out a plan to gradually unwind its 2.2 million bpd of cuts over 18 months, according to Vanda Insights. 'Sentiment got a fresh bearish jolt from media reports after Saturday's meeting that the G8 could bring back the entire 2.2 million bpd into the market by November,' the consultancy said. On Sunday, Barclays lowered its Brent oil price forecast by $4 per barrel to $66 per barrel for 2025 and by $2 to $60 per barrel for 2026, citing the decision by Opec+ to accelerate oil production hikes. 'Tariff-related developments have certainly been a drag but the Opec+ pivot has also been a significant driver of the move lower in oil prices of late,' Reuters cited Barclays as saying in a note to investors. Barclays also revised its baseline view on Opec+, expecting the group to continue its accelerated path of phasing out additional voluntary adjustments, and now sees it taking effect in six months from the initial plan of 18.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
an hour ago
- Zawya
Oil to open higher as US strikes on Iran boost supply risk premium
LONDON: Oil is likely to rise by $3-5 per barrel when trading resumes on Sunday evening after the U.S. attacked Iran at the weekend, market analysts said, with gains expected to accelerate only if Iran retaliates hard and causes a major oil supply disruption. U.S. President Donald Trump said he had "obliterated" Iran's main nuclear sites in strikes overnight, joining an Israeli assault in an escalation of conflict in the Middle East as Tehran vowed to defend itself. Iran is OPEC's third-largest crude producer. "An oil price jump is expected," said Jorge Leon, head of geopolitical analysis at Rystad and a former OPEC official. "Even in the absence of immediate retaliation, markets are likely to price in a higher geopolitical risk premium." Global oil benchmark Brent crude could gain $3 to $5 per barrel when markets open, SEB analyst Ole Hvalbye said in a note. Brent settled at $77.01 a barrel on Friday and U.S. West Texas Intermediate at $73.84. Ole Hansen, analyst at Saxo Bank, said crude could open $4 to $5 dollars higher, with potential for some long positioning being unwound. Crude had settled down on Friday after the U.S. imposed fresh Iran-related sanctions, including on two entities based in Hong Kong, and counter-terrorism-related sanctions, according to a notice on the U.S. Treasury Department website. Brent has risen 11% while WTI has gained around 10% since the conflict began on June 13 with Israel targeting Iran's nuclear sites and Iranian missiles hitting buildings in Tel Aviv. Currently stable supply conditions and the availability of spare production capacity among other OPEC members have limited oil's gains. Risk premiums have typically faded when no supply disruptions occurred, said Giovanni Staunovo, analyst at UBS. "The direction of oil prices from here will depend on whether there are supply disruptions - which would likely result in higher prices - or if there is a de-escalation in the conflict, resulting in a fading risk premium," he said. A senior Iranian lawmaker said on June 19 that the country could shut the Strait of Hormuz as a way of hitting back against its enemies, though a second member of parliament said this would only happen if Tehran's vital interests were endangered. About a fifth of the world's total oil consumption passes through the strait. SEB said any closure of the strait or spillover into other regional producers would "significantly lift" oil prices, but they saw this scenario as a tail risk rather than a base case given China's reliance on Gulf crude. Ajay Parmar, oil and energy transition analytics director at consultancy ICIS, said it was unlikely Iran would be able to enforce a blockage of the strait for too long. "Most of Iran's oil exports to China pass through this strait and Trump is unlikely to tolerate the inevitable subsequent oil price spike for too long - the diplomatic pressure from the world's two largest economies would also be significant," he said. (Reporting by Anna Hirtenstein, Ahmad Ghaddar, Robert Harvey and Seher Dareen in London, Arunima Kumar in Bengaluru, editing by Alex Lawler, Clelia Oziel and Giles Elgood)
Khaleej Times
2 hours ago
- Khaleej Times
Israel-Iran conflict: What is the Strait of Hormuz? Why is it so important for oil?
[Editor's Note: Follow our live blog for real-time updates on the latest developments in the Israel-Iran conflict.] Iran's top security body must make the final decision on whether to close the Strait of Hormuz, Iranian TV said on Sunday, after parliament reportedly backed the measure in response to US strikes on several of Tehran's nuclear sites. Iran has in the past threatened to close the strait but has never followed through on the move, which would restrict trade and impact global oil prices. Below are details about the strait: What is the Strait of Hormuz? The strait lies between Oman and Iran and links the Gulf north of it with the Gulf of Oman to the south and the Arabian Sea beyond. It is 21 miles (33 km) wide at its narrowest point, with the shipping lane just 2 miles (3 km) wide in either direction. Why does it matter? About a fifth of the world's total oil consumption passes through the strait. Between the start of 2022 and last month, somewhere between 17.8 million and 20.8 million barrels of crude, condensate and fuels flowed through the strait daily, data from analytics firm Vortexa showed. OPEC members Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia. The UAE and Saudi Arabia have sought to find other routes to bypass the strait. About 2.6 million barrels per day (bpd) of unused capacity from existing UAE and Saudi pipelines could be available to bypass Hormuz, the U.S. Energy Information Administration said in June last year. Qatar, among the world's biggest liquefied natural gas exporters, sends almost all of its LNG through the strait. The U.S. Fifth Fleet, based in Bahrain, is tasked with protecting commercial shipping in the area. History of tensions In 1973, Arab producers led by Saudi Arabia slapped an oil embargo on Western supporters of Israel in its war with Egypt. While Western countries were the main buyers of crude produced by the Arab countries at the time, nowadays Asia is the main buyer of OPEC's crude. The U.S. more than doubled its oil liquids production in the last two decades and has turned from the world's biggest oil importer into one of the top exporters. During the 1980-1988 Iran-Iraq War, the two sides sought to disrupt each other's exports in what was called the Tanker War. In July 1988, a U.S. warship shot down an Iranian airliner, killing all 290 aboard, in what Washington said was an accident and Tehran said was a deliberate attack. In January 2012, Iran threatened to block the strait in retaliation for U.S. and European sanctions. In May 2019, four vessels - including two Saudi oil tankers - were attacked off the UAE coast, outside the Strait of Hormuz. Three vessels, two in 2023 and one in 2024, were seized by Iran near or in the Strait of Hormuz. Some of the seizures followed U.S. seizures of tankers related to Iran.
Arabian Post
2 hours ago
- Arabian Post
ArabyAds Elevates MENA Marketing by Winning Snapchat Advanced Partner Badge
Arabian Post Staff -Dubai ArabyAds has secured the prestigious Snapchat Advanced Partner badge, marking a significant milestone that positions the UAE-based ad-tech firm at the forefront of digital innovation across the Middle East and North Africa. The designation grants the company exclusive access to Snapchat's latest tools, data analytics, and strategic support, enabling clients and creators in the region to harness full‑funnel campaign opportunities on the platform. This recognition underlines ArabyAds' deliberate investment in human capital and know‑how, rather than simply technical capability. As part of the Snapchat Advanced Partner programme, the company gains access to private training sessions, expert enablement, account‑management backing and early‑stage features like Snap's Creator Discovery API and Snap Creator Marketplace Beta. The badge also comes with visibility and credibility as Snapchat builds its ecosystem through trusted agency partnerships. ADVERTISEMENT ArabyAds Vice‑President of Digital, Ayah Reyad, emphasised that working with Snapchat has been instrumental in expanding market share and inspiring creativity, and that the advanced partner status will deepen relationships with clients and unlock new possibilities in digital storytelling. The move adds another layer to ArabyAds' portfolio of regional achievements, which include being named Marketing Platform of the Year 2023 by MMA Smarties MENA and the prior launch of their AI‑powered Household Graph for cross‑platform audience reach. Snapchat states that over 67% of users follow creators to see real, everyday moments, underlining the emphasis on authentic connection. The platform reports that 97% of users are open to brand‑sponsored creator content, and 59% have made purchases following exposure to such campaigns. This context sets the stage for ArabyAds to broker more effective creator partnerships on behalf of brands, using bespoke targeting informed by data and platform insight. The Advanced Partner badge places ArabyAds among an elite selection of regional agencies, including Publicis Groupe‑Content Practice, Creo, InHype and The Goat Agency MENA. Snap's pilot cohort benefits from direct collaboration opportunities with Snapchat teams, hands‑on enablement events and tailored access to analytics and certification from Snap Focus. A Partner Enablement Day in Dubai offered immediate immersion into platform tools and strategic best practice, reinforcing the parent company's goal to build a vibrant creator economy across the MENA region. Senior figures from other agencies in the cohort echoed Snap's confidence in ArabyAds. Timothée Desormeaux, Managing Partner and Co‑founder of Acquisit, noted that Snap values their data‑driven and measurement‑focused approach, which has helped solve complex client challenges in the region. Snap's head of agency relations in the region, Rasha El‑Ghoussaini, described the partner initiative as part of a broader strategy to support agencies amid rapid transformation across digital markets. For ArabyAds' clients, the benefits are multifaceted. The Creator Discovery API enables mapping and analysis of over 100,000 MENA creators, enabling data‑led influencer alignment. End‑to‑end ROI tracking, combined with advancement in AR and creative strategy, allows brands to build measurable campaigns that drive deeper engagement and conversions. ArabyAds is now well placed to offer clients a full‑stack solution on Snapchat: from creator identification and certification through Snap Focus, to influencer campaign activation using the Creator Marketplace, and ongoing optimisation via account management and platform insights. The firm's trajectory signals intention not only to maintain growth, but to shape what high‑impact creator collaboration looks like in the region.
