By Adedapo Adesanya
Oil prices fell by more than 4 per cent on Monday as speculation continued that the eight leading producers in the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) would unwind their voluntary production cuts and Libya could resolve a dispute that led to supply disruptions.
Data showed that Brent crude sold at $73.75 per barrel after it went down by $3.77 or 4.86 per cent and the US West Texas Intermediate (WTI) crude declined by $3.21 or 4.36 per cent to trade at $70.34 per barrel.
Oil prices were already under pressure as OPEC+ is poised to increase production in the coming weeks, and manufacturing activity in China and the US disappointed the market.
The eight leading OPEC+ producers are expected to start unwinding voluntary output curbs with a 180,000 barrels per day boost in October.
Iraq, the largest overproducer within OPEC+ that pledged to cut 1.44 million barrels per day of output over the next 12 months as part of a compensation plan, has now vowed to confront Kurdish authorities over surplus production volumes.
Crude production in Iraq’s semi-autonomous Kurdistan region continues to increase as industry organizations have stated output surpassed the 350,000 barrels per day mark in recent weeks, the highest since early 2023.
OPEC+, however, made it clear in June that it could reverse the planned production increase based on market conditions.
Market analysts noted that the best course for OPEC+ would be to wait until December given the slowing demand in China.
Developments in Libya also affected the market as reports emerged that rival governments in the oil producer could reach a deal that would help restore oil output after days of disruptions.
Libya’s eastern government in Benghazi has slashed production in a dispute with the UN-backed government in Tripoli over who should head the central bank.
The governor of Libya’s central bank, Mr Sadiq al-Kabir, told Bloomberg that there were “strong” indications the North African country’s rival governments were nearing a deal to end the dispute.
Manufacturing in China, meanwhile, fell to a six-month low in August, according to data released over the weekend. China is the world’s largest importer of crude oil.
Also, manufacturing activity in the US was slower than expected last month, according to a report from the Institute for Supply Management on Tuesday.
