Looming sanctions, Trump's Opec outbursts and signs of an economic slowdown in Asia also dented the outlook for demand
Oil prices fall as Saudi Arabia and Russia pump more
Oil prices fell on Monday as supplies from Saudi Arabia and Russia rose, and as signs of an economic slowdown in Asia dented the outlook for demand.
Brent crude oil futures were at $78.29 per barrel at 06.45 GMT, down 94 cents, or 1.2 per cent, from their last close.
U.S. West Texas Intermediate crude futures were down 67 cents, or 0.9 per cent, at $73.48 a barrel, after rising more than 8 per cent last week.
Prices in the physical oil market have also weakened, with Dubai crude averaging $73.592 a barrel for June, down from $74.413 a barrel in May.
Adding to pressure on oil, US President Donald Trump wrote in a weekend tweet that Saudi Arabia's King Salman bin Abdulaziz Al Saud had agreed to produce more oil. The White House later walked back on Mr Trump's comments, saying the king said his country can raise oil production, if needed.
Saudi Arabia's output is up by 700,000 barrels per day (bpd) from May, a Reuters survey found on Friday, and close to its 10.72 million bpd record from November 2016.
Further compensating for supply disruptions elsewhere was Russian output, which the Energy Ministry said on Monday stood at 11.06 million bpd in June, up from 10.97 million bpd in May.
Production in the United States has also soared by 30 per cent in the past two years, to 10.9 million bpd, meaning the world's three biggest oil producers now churn out almost 11 million bpd each, meeting a third of global oil demand.
Starting to weigh on oil demand are trade disputes between the United States and other major economies including China, the European Union, India and Canada.
Asia's main economic hubs of China, Japan and South Korea all reported a slowdown in export orders in June amid escalating trade disputes with the United States.
"Recurring salvos in the trade war and falling asset prices raise the question of how much tariffs could damage the global economy, US bank JP Morgan.
The bank said a "medium-intensity [trade] conflict would likely reduce global economic growth by at least 0.5 per cent, "before accounting for tighter financial conditions and sentiment shocks."
Despite the relief from Saudi Arabia and Russia, oil markets remain tense because of unplanned outages from Canada to Venezuela and Libya.
Looming US sanctions against Iran further contribute to expected tightness.
Mr Trump threatened in an interview that aired on Sunday to sanction European companies that do business with Iran.
"The Trump administration's plan for Iran sanctions is now abundantly clear. They seek to push Iranian exports of crude, condensate, and oil products to zero," energy consultancy FGE said in a note.
"Overall, 2.4 million to 2.7 million bpd of Iranian crude/condensate is at risk by year end ... We must all be prepared for a potentially major price volatility ahead," FGE added.