Oil prices took a sharp hit on Monday after eight OPEC+ countries surprised themselves by increasing their crude output. Saudi Arabia, Russia, and six other key members of the oil-producing alliance announced a 411,000 barrel per day production boost on Saturday. This unexpected decision has raised fears of an oversupply in the market.
The timing of the announcement added to the existing pressure on oil prices, which were already falling due to concerns about a global economic slowdown. These fears have been fueled further by US President Donald Trump’s ongoing tariff strategy, which continues to shake global trade confidence.
“OPEC+ has just thrown a bombshell to the oil market,” said Jorge Leon, an analyst with Rystad Energy. He pointed out that the Saturday announcement signals a major shift in strategy from the Saudi-led group. “They’re now moving away from production cuts and are clearly focusing on regaining market share,” he added.
Stock markets across Asia showed mixed reactions. Trading was thin because of public holidays in major markets, including Tokyo, Hong Kong, and mainland China. In Taiwan, the stock index moved slightly lower. Meanwhile, Jakarta’s market posted gains.
Australia’s stock market also dipped. The S&P/ASX 200 fell nearly 1% on Monday, although the Australian dollar edged up slightly against the US dollar. The currency movement came after the weekend’s national election result, which saw Prime Minister Anthony Albanese return to power.
In the United States, Wall Street closed last week with strong gains. The positive mood was driven by better-than-expected jobs data and fresh hopes surrounding trade talks between the US and China. Investors are watching closely to see if there’s any real progress in resolving trade disputes.
Europe’s main stock markets also saw gains. Paris and Frankfurt both climbed more than two per cent despite the eurozone inflation figures showing no change. Inflation remains just above the European Central Bank’s target of 2%, but investors appeared more focused on trade optimism and signs of stability.
London’s market also moved higher, with mining and commodity-related stocks leading the way. These sectors are particularly sensitive to trends in Chinese demand, and some traders believe that improved relations between China and the US could help boost commodity prices again.
Stephen Innes from SPI Asset Management said that markets seem to be in a “pause mode,” waiting for the next major development to set direction. He mentioned that the next trigger could be fresh updates on the US-China trade situation or the ongoing budget talks in Washington.
For now, the oil market remains in a state of uncertainty. OPEC+’s decision to increase output instead of cutting back has shifted the market’s focus. It remains to be seen whether this move will stabilize prices in the long term or trigger more volatility, especially as global demand signals remain mixed.
With major Asian markets closed for holidays, global financial activity was relatively low in the early part of the day. But analysts warn that the effects of the OPEC+ decision will likely ripple through markets in the coming days, especially if there are no signs of stronger oil demand from large economies like China or the United States.
Key market figures around 03:00 GMT:
- Tokyo: Nikkei 225 – Closed for holiday
- Hong Kong: Hang Seng Index – Closed for holiday
- Shanghai: Composite – Closed for holiday
- Euro to Dollar: Up to $1.1341 from $1.1299 on
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