Oil prices fell to $70 U.S. a barrel after the Organization of the Petroleum Exporting Countries (OPEC+) agreed to end oil production cuts.
Brent crude futures fell 2.13% to $72.02 U.S. per barrel, while U.S. crude oil futures fell 2.09% to $70.31 U.S. a barrel on the news.
The group of oil producing countries agreed to increase production by 400,000 barrels per day on a monthly basis starting in August as it moves to phase out production cuts of about 5.8 million barrels per day by September 2022.
The OPEC+ deal comes as oil prices were hovering close to their highest levels in more than two years.
Negotiations to increase production had been stalled after the United Arab Emirates rejected the group’s proposal for the rollback of the oil cuts. It left the industry and investors in limbo as experts warned that prices could either hit new highs or collapse without an agreement.
Last year, to cope with lower demand as the pandemic hurt economies and people could not travel, OPEC+ agreed to curb output by almost 10 million barrels a day from May 2020 to April 2022.
Prices fell to historic lows last year, as the impact of the pandemic wiped out oil demand. West Texas Intermediate crude oil fell below zero for the first time before recovering to over $10 U.S. a barrel at one point. Brent oil fell to a nearly two-decade low of nearly $20 U.S. per barrel.
Additionally, the U.S. and Iran are in the process of renegotiating a 2015 nuclear deal, which could mean a return of Iranian oil to the market.
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