Jim Urquhart/Reuters
West Texas Intermediate slid 7% on Monday, with Brent down 6% as prices hit their lowest since early June.
Prices suffered as OPEC+ reached a deal to increase supply by 400,000 barrels a day starting in August.
At the same time, rising global cases of coronavirus renew worries about oil demand.
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Oil prices tumbled by nearly 7% on Monday after major producers moved to supply more oil to the global market, with the agreement arriving as a surge in COVID-19 cases stoked worries about demand for crude.
West Texas Intermediate crude prices sank 6.8% to $66.90 per barrel, the lowest price since June 1. Brent oil, the global benchmark, fell by 6% to $69.21.
Prices came under pressure after OPEC and its allies agreed to boost stockpiles by 400,000 barrels a day beginning in August, with monthly production increases continuing until April 2022.
As more oil is set to come online, cases of COVID-19 from the Delta strain of the virus have been accelerating worldwide, pushing total cases to more than 190 million. The UK recorded more than 50,000 new cases for the first time in six months on Friday. In the Asian financial hub Singapore, new cases nearly doubled to their highest amount in 11 months. In the US, infections are rising in all 50 states, with Los Angeles County, the largest in the country, reimposing indoor mask mandates.
OPEC+ struck its deal over the weekend after a deadlock between Saudi Arabia and the United Arab Emirates was resolved. The agreement also comes as oil prices this year had climbed about 40% this year to nearly three-year highs on expectations that mass vaccinations against COVID-19 would invigorate the demand for oil that was devastated by last year's onset of the pandemic.
OPEC+ is aiming to add 2 million barrels per day to the market by the end of 2021.
"Investors should understand that the cartel has agreed to boost oil production and has decided to restore all supply removed from the market during the coronavirus pandemic by the end of 2022," Naeem Aslam, chief market analyst at AvaTrade, said in a note Monday.
"However, traders should keep in mind that the slow pace of production growth indicates that producers are comfortable with current oil prices and are likely concerned about the pace of economic recovery as new coronavirus variants emerge," he said. "Therefore, it is uncertain whether the planned rise in oil supply will hinder a rise in oil prices as demand continues to rise."
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