Oil Prices Slide as OPEC+ Increases Output; US Futures Retreat Ahead of Fed Meeting

Oil prices declined sharply and US stock futures dropped late Sunday as markets reacted to increased oil production from OPEC+ and looked ahead to a pivotal Federal Reserve meeting this week.

Crude oil prices fell more than 4% following an announcement by the OPEC+ group of oil-producing nations to raise output for a second consecutive month. West Texas Intermediate (WTI) crude dropped $2.49, or 4.27%, to $55.80 per barrel, while Brent crude fell $2.39, or 3.9%, to $58.90 per barrel. The new output hike of 411,000 barrels per day in June, following a similar increase in May, is adding to concerns of oversupply in a market already facing weakened demand.

Oil has now lost over 20% of its value this year, with April marking its steepest monthly decline since 2021. The production boost, led by Saudi Arabia, is partly seen as a response to non-compliance by member nations such as Iraq and Kazakhstan, and also interpreted by some analysts as a diplomatic gesture toward the US ahead of President Donald Trump’s scheduled visit to the Middle East.

“Washington wants cheap energy, and Gulf producers still lean on US security guarantees,” said Stephen Innes of SPI Asset Management, adding that the US president now acts as an “unofficial swing vote inside OPEC+.”

However, the sustained decline in oil prices is now pressuring profitability for producers. Oilfield service firms like Baker Hughes and SLB have warned of reduced investment in exploration due to the challenging price environment. Major oil companies such as Chevron and Exxon also reported lower first-quarter earnings year-over-year, citing falling oil prices.

Meanwhile, US equity futures also retreated. Dow Jones Industrial Average futures were down about 280 points (0.7%), while S&P 500 and Nasdaq-100 futures dropped 0.8% and 0.65%, respectively, as of late Sunday evening. The pullback comes after the S&P 500 logged its longest winning streak since 2004, closing higher for nine straight sessions last week.

Investors are now turning their attention to the Federal Reserve’s upcoming policy meeting. While no rate cut is expected, markets will closely scrutinize Fed Chair Jerome Powell’s comments on Wednesday for any indications of future monetary easing. The CME FedWatch tool continues to price in multiple rate cuts before the end of 2025, despite skepticism from some corners of Wall Street.

In broader market developments, US job data released last week showed 177,000 new positions added in April—slightly down from March but still above expectations—helping to boost equities amid ongoing trade tensions and economic uncertainty. Still, with inflation concerns, geopolitical tensions, and new tariffs weighing on sentiment, volatility is expected to persist.

Market Watch, CNBC, Reuters, and the Associated Press contributed to this report.