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Oil has fallen as investors prepare for an extra one million barrels per day (bpd) of oil to hit markets after OPEC agreed to raise production and as US equity markets slipped on trade war fears.

Brent crude futures fell 82 cents, or 1.1 per cent, to settle at $US74.73 a barrel. US light crude settled at $US68.08 a barrel, down 50 cents.

‘The trade tensions and overall global market concerns are what’s holding crude back today,’ said Bill Baruch, president of Blue Line Futures in Chicago.

US stocks sank in a broad sell-off on escalating US-China trade tensions.

‘The expectation that we’ll see more crude out of OPEC and that supplies in the US will be tight because of the Syncrude outage … is going to keep the market on edge,’ said Phil Flynn, analyst at Price Futures Group.

Losses in US crude prices were limited by the likelihood that an outage at Syncrude Canada’s 360,000 bpd oil sands facility would last through July. The outage is expected to limit crude arriving at Cushing, Oklahoma, delivery point of the US futures contract.

This helped further shrink US crude’s discount to global benchmark Brent to as small as $US4.78. The spread was as wide as $US11.57 on June 1, but had started contracting ahead of OPEC’s expected supply increase, analysts said.

On Friday, the Organization of the Petroleum Exporting Countries and its allies agreed to modestly boost global oil supplies.

The group, which has been curbing output since 2017, said it would raise supply by returning to 100 per cent compliance with agreed output cuts, after months of underproduction, largely due to unplanned disruptions in places including Venezuela and Angola.

The head of Saudi oil giant Aramco said it has spare capacity of 2 million bpd and can meet additional demand in case of supply interruptions.

Still, US bank Goldman Sachs anticipates an oil market deficit.

‘Saturday’s OPEC+ press conference provided more clarity on the decision to increase production, with guidance for a full 1 million bpd ramp-up in 2H18,’ Goldman said in a note on Sunday.

‘This is a larger increase than presented Friday although the goal remains to stabilize inventories, not generate a surplus.’

US Energy Secretary Rick Perry said the deal may not be enough.

‘Obviously we’ve got a market that is stressed from a standpoint of supply,’ Perry said, and the agreement ‘may be a little short’ of what is needed.