Oil prices down almost 5%
The positive outlook from OPEC´s production increase has already vanished.

For better or worse, the world's oil producers decided last week to defy Saudi Arabia and press for higher output in the next three months. After being patted on the back and even rewarded, the market is now saying it was definitely for the bad. Crude oil prices fell more than 4% on Monday, reversing the rally leading up to Good Friday as traders disapproved of OPEC + 's decision to end its year-long production cuts on the assumption of rising summer demand for oil. The 23 members of OPEC + - made up of the original 13 members of the Saudi Arabia-led Organization of Petroleum Exporting Countries and 10 other oil-producing nations controlled by Russia - said Thursday that they will pump an additional 350,000 barrels a day in May and June and another 400,000 daily in July. Saudi Arabia initially did not want to increase the production volume, but gave in to pressure from the other members of the cartel. While the announcement was greeted by a friendly market at the time, it was viewed with a different lens on Monday due to the persistent coronavirus situation outside of the United States. The latest reports on the Covid-19 pandemic showed that the British variant of the virus continues to scorch parts of Europe - Poland had 60 times more cases than a year ago. A record of more than 100,000 infections per day was recorded in India over the weekend. Europe, as a region, is one of the largest single consumers of oil, while India is itself the third largest buyer of crude oil. London-traded Brent, the global benchmark for crude oil, fell $ 2.71, or 4.2%, to $ 62.15 a barrel. Brent's low was $ 61.25 and was not hit on March 25th. New York-traded West Texas Intermediate, the benchmark for US crude oil, was down $ 2.80, or 4.6%, to $ 58.65. Previously, WTI had hit a two-week low of $ 57.63. Crude oil prices also came under pressure when Iran opened talks with world powers in Vienna to find a way to end the two-year US sanctions imposed on its oil by the previous Trump administration. The White House, now under President Joseph Biden, is happy to end the sanctions if Tehran provides evidence that its nuclear program is incapable of producing an atomic bomb. However, Iran is demanding that the sanctions be lifted first before making such concessions. The stalemate between the two sides - with US officials who, at Iran's insistence, do not even attend the talks in person and use intermediaries from other world powers to put pressure on Tehran - suggests that an agreement will not be reached anytime soon . While that should be positive for oil prices, the problem for the market is that Iran has been breaking sanctions for some time by secretly selling oil to China even when Trump was in office. Since the current government took office in January, Iran has grown much bolder about the violations, as Biden has paid more than lip service to Trump's sanctions. Even if Iran doesn't get a deal to lift the sanctions right away, it will continue to bring oil to the market - in addition to the OPEC + supply increase coming from May. This is what is really worrying the market right now.





