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Oil prices dropped sharply on Monday after eight members of the OPEC+ alliance, including Saudi Arabia and Russia, unexpectedly announced a significant production increase of 411,000 barrels per day, sparking fresh fears of an oversupplied market.
The move surprised analysts and added pressure to already falling crude prices, which have been declining due to growing concerns about a potential global economic slowdown triggered by US President Donald Trump’s escalating tariffs.
“This decision is a bombshell for the oil market,” said Jorge Leon from Rystad Energy. “It signals a clear shift in strategy from the Saudi-led group, which is now prioritising market share over production cuts after years of restraint.”
The news weighed on broader market sentiment, although trading in Asia was muted due to public holidays in Japan, Hong Kong, and mainland China. Taiwan’s stock market dipped slightly, while Indonesia’s Jakarta Composite Index saw modest gains.
In Australia, the S&P/ASX 200 index slipped by nearly one percent, despite the local dollar strengthening following Prime Minister Anthony Albanese’s weekend election win.
On Wall Street, markets wrapped up last week on a strong note, buoyed by encouraging US employment figures and renewed hope for progress in trade discussions with China.
European equities also moved higher, with both Paris and Frankfurt gaining over two percent. Investors shrugged off data showing eurozone inflation holding steady just above the European Central Bank’s two-percent goal. In London, stocks rose as well, led by mining and commodities firms that are closely tied to demand from China.
Stephen Innes of SPI Asset Management said markets appeared to be in a holding pattern, awaiting further developments. “The market is catching its breath before the next directional catalyst drops,” he noted, pointing to ongoing US-China trade talks and budget negotiations in Washington as possible drivers.
