An increase in supplies from Saudi Arabia, the de-facto leader of the OPEC, and Russia have pulled down oil prices.
Brent crude futures declined $1.24 to $77.99 per barrel before recovering to $78.40, a drop of 83 cents, Reuters reported.
US light crude went down 50 cents to trade at $73.65 a barrel.
Last week, the US crude contract touched its highest level in three and a half years to reach $74.46.
However, a series of statements made by the US administration over the weekend unsettled oil markets, with President Donald Trump announcing on social media that Saudi Arabia agreed to increase output up to two million barrels.
According to a Reuters survey, Saudi Arabia’s output soared by 700,000 barrels per day from May and stays close to its 10.72 million barrels per day record witnessed in November 2016.
Russia’s production jumped to 11.06 million barrels per day last month from 10.97 million barrels per day in the previous month, as per data shown by the Energy Ministry.
Over the last two years, US production increased by 30% to reach 10.9 million barrels per day.
Meanwhile, escalating trade tensions between the US and other economic forces including China, the European Union, India and Canada, is also weighing on oil demand.
Major Asian economies, including China, Japan and South Korea, reported a slowdown in crude export orders for last month in the midst of rising trade disputes with the US.
JPMorgan was quoted by the news agency as saying: “Recurring salvos in the trade war and falling asset prices raise the question of how much tariffs could damage the global economy.”
Despite Saudi Arabia and Russia pumping more oil, unplanned outages from Canada to Venezuela and Libya are causing tightness in the market, with impending US sanctions against Iran threatening to more supply issues.
