The price of Brent crude oil has dropped to a four-month low, closing at below $80 a barrel for the first time since February 7, as Saudi Arabia signalled it would struggle to maintain caps on future supply.
Brent crude dropped by more than $3 a barrel on Monday and dropped further on Tuesday morning, sitting at $77.52 a barrel (as of 7am).
It follows Saudi Arabia and Russia leading members of Opec+ to extend production cuts to oil output into next year.
Currently, collective output is being cut by around 6% of the world's demand, or 5.86 million barrels per day.
But Opec+ (Organisation for Petroleum Exporting Countries and its allies) also laid out a schedule for how the cuts would be unwound in a "surprisingly detailed" plan.
Voluntary cuts of 2.2 million barrels per day have been extended until the end of September, while a cut of 1.7 million barrels per day has been extended until the end of 2025.
The group said the 2.2 million cut "will be gradually phased out on a monthly basis until the end of September 2025 to support market stability” and that “this monthly increase can be paused or reversed subject to market conditions”.
Daan Struyven, head of oil research at American inevestment bank Goldman Sachs, said: “The communication of a surprisingly detailed default plan to unwind extra cuts makes it harder to maintain low production if the market turns out softer than bullish Opec expectations.”
Only eight of Opec+'s 18 members has agreed to the extra voluntary supply cuts. Those countries combined make up 30% of world output.