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Brent crude futures fell $1.36, or 1.8%, to $75.71 a barrel by
0859 GMT. U.S. West Texas Intermediate (WTI) crude was down
$1.19, or 1.6%, from Friday's close, to $71.48 a barrel. There
was no settlement on Monday because of a U.S. public holiday.
Some hard-right Republican lawmakers said on Monday they might
oppose a deal that would raise the debt ceiling in the U.S., the
world's biggest oil user, while Democratic President Joe Biden
and Republican House of Representatives Speaker Kevin McCarthy
remained optimistic the deal would pass.
Biden and McCarthy forged an agreement over the weekend and it
must pass a divided U.S. Congress before June 5, the day the
Treasury Department says the country will not be able to meet
its financial obligations, which could disrupt financial
markets.
"A potential default would have catastrophic economic
repercussions domestically as well as globally, which would have
an adverse impact on oil demand," PVM Oil's Tamas Varga said.
The debt deadline nearly coincides with the June 4 meeting of
the Organization of the Petroleum Exporting Countries (OPEC) and
allies including Russia, known as OPEC+, and the uncertainty
over whether they will increase their output cuts amid a recent
slump in prices is also weighing on the market.
Saudi Arabian Energy Minister Abdulaziz bin Salman last week
warned short-sellers betting that oil prices will fall to "watch
out" in a possible signal that OPEC+ may cut output.
However, comments from Russian oil officials and sources,
including Deputy Prime Minister Alexander Novak, indicate the
world's third-largest oil producer is leaning toward leaving
output unchanged.
In April, Saudi Arabia and other members of OPEC+ announced
further oil output cuts of around 1.2 million barrels per day
(bpd), bringing the total volume of cuts by OPEC+ to 3.66
million bpd, according to Reuters calculations.
Chinese manufacturing and service sector data out later this
week will also be scrutinised for cues on the fuel demand
recovery in the world's top oil importer.
(Additional reporting by Yuka Obayashi and Muyu Xu; editing by
Jason Neely)
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