On Monday, oil prices dropped after Opec+ broke a deadlock in reaching an agreement on oil production.
Both Brent and WTI Crude fell sharply as a result of the news, falling 2.41 percent and 2.55 percent, respectively.
On Sunday, Opec+ agreed to boost oil production by 400,000 barrels per day. By September of next year, the alliance will reverse a current drop of 5.8 million barrels per day.
The losses have been fueled by mounting concerns that a rebound in Covid cases could lead to the reintroduction of economic activity restrictions, reducing demand for gasoline in developed economies and driving down prices.
After weeks of deadlock, the group of oil-producing nations reached an agreement after the United Arab Emirates refused to raise oil output without increasing its baseline share.
Oil prices have risen to new highs in recent weeks as demand has outpaced supply.
Last year, Opec+ agreed to reduce output by 10 million barrels per day to balance the pandemic's impact on petroleum demand. Oil demand, on the other hand, has dramatically rebounded as economies throughout the world emerge from Covid limitations.
The coalition has steadily reduced the supply constraints caused by the pandemic to 5.8 million bpd.
Last week, the International Energy Agency cautioned that until supply constraints are alleviated, prices will remain high.
Analysts were encouraged by the agreement, predicting that despite the rise in supplies, the oil market will remain tight.
ANZ Research stated, "Even with higher output, the market remains relatively tight."
Oil producers are likely to focus on "maintaining a tight physical market while guiding for higher future capacity and disincentivizing competing investments," according to Goldman Sachs analysts.