Oil slipped on Monday after Saudi Arabia said an extension of output cuts by Opec+ nations would not include extra voluntary cuts by a trio of Gulf producers.

Brent crude was down 14 cents, or 0.3 per cent, at $42.16 per barrel, by 1210 GMT, while US West Texas Intermediate (WTI) crude fell 41 cents, or 1 per cent, to $39.14 a barrel.

The Organisation of Petroleum Exporting Countries, Russia and other producers — a group known as Opec+ — agreed in April to cut supply by 9.7 million barrels per day (bpd) in May and June. They agreed on Saturday to sustain those cuts through July.

Top exporter Saudi Arabia hiked its monthly crude prices for July. But Saudi energy minister Prince Abdulaziz bin Salman told a news conference on Monday that the kingdom and Gulf allies Kuwait and UAE would not cut by an extra 1.18 million bpd in July as they are doing this month. Those cuts were in addition to the 9.7 million bpd Opec+ plan.

Low prices have prompted Chinese buyers to boost imports. Purchases by the world’s largest crude importer hit an all-time high of 11.3 million bpd in May.

Analysts said higher oil prices could discourage buying and undercut the fragile recovery demand while prompting U.S. shale drillers to return to reopen wells.

Crude rate risks

The prolonged period of growth slowdown is likely to adversely impact India’s external sector, which at present is comfortably placed on account of subdued prices of crude oil in the international market, said an SBI report on Monday.

According to SBI’s Ecowrap report, India is likely to end the current fiscal with a current account surplus, if the oil prices in the international market remain subdued. However, the magnitude might shrink if oil prices show undue volatility and stay at over $40 per barrel for a sufficiently longer period of time, it added.

“We should be mindful of our external sector in 2020-21 as a prolonged period of growth slowdown could impact the external sector metrics, specifically the rupee,” it said.