Oil Prices Plunge Over 5% Amid OPEC+ Quota Increase, Supply Concerns

Global oil benchmarks fell sharply on Monday, with West Texas Intermediate (WTI) crude trading at $79.29 per barrel, down $5.38 or 6.35 percent, according to live price data. Brent crude fell 5.39 percent to $83.19. The price for Bakken crude at the wellhead weakened in tandem, with its discount to WTI holding at $3.42.

The steep decline follows a weekend meeting of seven OPEC+ countries who decided to boost the group's production targets by another 188,000 barrels per day starting in September, according to a statement cited by Rigzone. This move effectively completes the reversal of production cuts first agreed upon in 2023.

Bearish sentiment was fueled by a report that Kuwait's oil production surged to 1.971 million barrels per day in July, up from 1.65 million bpd in June, according to OilPrice.com. This increase supports data showing more oil is moving out of the Persian Gulf, despite continued security challenges in key shipping chokepoints like the Strait of Hormuz and the Bab el-Mandeb Strait.

Adding to the global supply picture, India's imports of Russian crude hit a record 2.8 million bpd in July, accounting for over 55% of its total imports, OilPrice.com reported, citing Kpler data. This sustained high volume comes even after a U.S. waiver on such purchases expired in mid-June. The report noted India also resumed imports from Kuwait for the first time since March.

These developments indicate a complex global market where theoretical OPEC+ supply increases are colliding with real logistical disruptions. While the group plans to produce 1.65 million bpd more in September than it did in 2023, actual flows remain hampered. Kazakhstan, for instance, was forced to slash output to about 1 million bpd in late July due to Ukrainian drone attacks on the Novorossiysk export terminal.

For Bakken operators, the sharp drop in the headline WTI price directly pressures cash flows and drilling economics. The Bakken differential of -$3.42 means local crude is priced near $75.87 per barrel. The expanding global supply, particularly from OPEC+ members like Kuwait, contributes to the downward pressure on the benchmark prices that Bakken crude is tied to. Operators will be watching whether the current supply increases are fully realized or continue to be offset by geopolitical outages.

Natural gas prices showed minor strength, rising one cent to $2.76, providing little offset to the crude oil plunge.