Brent drops to $59 as Saudi pushes for cuts rollback; analysts brace for supply glut
By IDNN Business & Global Markets Desk
Oil prices plunged by more than $2 per barrel on Monday after the Organization of the Petroleum Exporting Countries and allies (OPEC+) confirmed plans to further accelerate output hikes, stoking fears of a supply glut amid sluggish demand projections.
Brent crude fell $2.21 or 3.61%, trading at $59.08 per barrel by 0653 GMT — the lowest since early April. U.S. West Texas Intermediate (WTI) dropped $2.29, or 3.93%, hitting $56.00 per barrel.
The sell-off follows OPEC+’s decision to raise output by 411,000 barrels per day (bpd) in June, marking the second straight month of acceleration. If the group maintains this pace, it would unwind 44% of the 2.2 million bpd cuts agreed upon since 2022 by the end of October.
Saudi Pushback, Contango Emerges
Sources say Saudi Arabia is pressuring the bloc to fast-track its rollback of production cuts, frustrated with Iraq and Kazakhstan’s poor compliance.
Traders are watching the futures market closely, where the Brent six-month spread has flipped into a contango — oil is now cheaper in the short term than it will be later, a clear sign of perceived oversupply.
“The shift to contango, though modest at 11 cents, reflects rising fears that global oil demand may not absorb the influx,” said one energy analyst.
What It Means for Nigeria, Africa
The global price dip comes at a sensitive time for African oil exporters, especially Nigeria, which is counting on high crude prices to stabilize public finances.
A prolonged slump in oil prices could:
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Undermine revenue projections in the 2025 budget
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Complicate forex supply for CBN
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Increase pressure on petrol subsidy policy and Dangote refinery economics
Analysts warn that any sustained drop below $60 could trigger fresh rounds of fiscal instability across oil-dependent economies.
Market Outlook
With Brent prices now hovering around critical support levels, market watchers say the focus will shift to:
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Demand growth signals from China and India
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OPEC+ compliance levels
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U.S. stockpile and rig data
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Geopolitical risks in the Middle East and Ukraine
OPEC+ has warned that failure by members to improve quota compliance could lead to internal penalties — possibly even sanctions or voting rights suspension.
For now, traders are bracing for continued volatility, especially if weak demand persists into the summer.