(Bloomberg) — Oil slumped as OPEC discussed making a second major production increase, inflaming concerns about swelling global supplies that have dragged down crude prices this year. 

West Texas Intermediate futures fell almost 2% to trade around $58 a barrel, continuing a slide this week that has brought prices near the lowest since early 2021. Key OPEC nations are considering another production increase of about 400,000 barrels a day in June ahead of a meeting the group pushed forward two days to May 3.

Another aggressive supply boost from the cartel threatens to batter a market already pressured by soft Chinese demand and plentiful output from outside the group. The increase would be in line with figures previously telegraphed by the group and roughly matches last month’s shock hike, which was seen as a bid to discipline over-producing members.

“OPEC’s decision framework appears to be fueled by the persistent cheating, particularly from the likes of Iraq, Kazakhstan, Russia among others,” TD Cowen strategists including Dan Ghali and Bart Melek said in a note to clients. Inventories may increase by about 200 million barrels over the next three quarters, which could drop crude toward the low $50s, they wrote. 

Crude has shed about 19% this year — and briefly touched a four-year low last month — as the Trump administration’s tariffs fan concerns that energy demand will fall. 

The drop in prices is already showing signs of squeezing a key industry that US President Donald Trump pledged to help. Some of the biggest US shale-oil producers plan to slash about 4% of their drilling rigs by the end of the year. Chevron Corp. said on an earnings call on Friday that it would reduce share buybacks, citing a softening market. 

The bearish OPEC development overshadowed earlier news that China is assessing the possibility of talks with the US that could ease the trade conflict between the two economic giants. The Wall Street Journal reported later that China had approached the Trump administration to ask what changes the US was seeking in relation to the production of precursor chemicals that are used to make fentanyl. 

Limiting crude’s losses was Trump’s pledge to impose secondary sanctions on any nations or companies buying Iranian oil, ratcheting up pressure on Tehran as nuclear talks with Washington hit a snag. The vow follows a similar move in early March to place “secondary tariffs” on countries that obtain oil from Venezuela. 

Top buyers of crude from the targeted nations, like China and India, are also the epicenters of the US-led trade war, meaning the indirect penalties may exacerbate economic strain from Beijing to New Delhi. 

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–With assistance from Jake Lloyd-Smith.

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