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Crude Oil Futures Settle Sharply Lower On Oversupply Concerns

Crude oil prices fell sharply on Monday, weighed down by concerns about oversupply in the market after the Organization of the Petroleum Exporting Countries and it allies, collectively known as OPEC+, agreed to boost output.

Oil prices were also hurt by rising concerns about outlook for energy demand due to the rapidly spreading delta variant of the coronavirus and fresh restrictions on movements in several countries across the world.

West Texas Intermediate Crude oil futures for September ended down $5.21 or about 7.3% at $66.35 a barrel, recording the biggest single-session decline in more than a year.

Brent Crude futures were down $5.24 or 7.1% at $68.36 a barrel a little while ago.

After several rounds of discussions and uncertainty about a proposed output policy move following differences between Saudi Arabia and the United Arab Emirates, the OPEC cartel and partners, including Russia, finally agreed on Sunday to boost supply from August.

As per the agreement reached, the cartel boost output by 400,000 barrels a day each month from August, continuing until all of its halted output has been revived.

The agreement also reveals baseline increases for four of OPEC's member states and one non-OPEC state beginning in May of 2022.

The truce between the two long-time allies sparked concerns about a crude surplus as COVID-19 infections surge worldwide.

The global coronavirus caseload has surpassed 190 million due to the spread of new variants. Daily infections have been surging from the United States and Europe to Asia and the global seven-day average of new cases each day is over half a million for the first time since May.

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