Oil prices have slumped nearly 4pc despite Opec production cuts amid signs that Saudi Arabia will struggle to maintain caps on future supply.

The price of Brent crude dropped by more than $3 on Monday, falling to a four-month low of $78.33 per barrel, even after the Saudi-led cartel announced it would extend voluntary production cuts for another three months.

This was because, although the Organisation for Petroleum Exporting Countries and its allies (Opec+) announced on Sunday that it would extend all three tranches of its production cuts for significantly longer than expected, it also laid out a schedule for how the cuts would be unwound, which analysts said was “surprisingly detailed”.

Daan Struyven, head of oil research at Goldman Sachs, said that this means it will now be more difficult for Opec+ to continue low levels of production if demand is lower than expected.

Opec+ said it would extend extra voluntary cuts of 2.2m barrels of oil per day for three months longer than planned, until the end of September, as well as extending two other layers of group and voluntary cuts for an extra year until the end of 2025.

But it also said that the 2.2mb/d in extra voluntary cuts “will be gradually phased out on a monthly basis until the end of September 2025 to support market stability” and that “this monthly increase can be paused or reversed subject to market conditions”.

Mr Struyven said: “The communication of a surprisingly detailed default plan to unwind extra cuts makes it harder to maintain low production if the market turns out softer than bullish Opec expectations.”

Opec expects demand will grow by 2.2mb/d this year, far higher than the 1.5mb/d forecast by Goldman Sachs.

Mr Struyven added: “The communication of this gradual unwind from 2024Q4 reflects a strong desire to bring back production of several members as a result of high spare capacity.”

Callum Macpherson, head of commodities at Investec, said Opec+’s power over market pricing is diminishing.

Only eight of Opec+’s 18 members have agreed to the 2.2mb/d in extra voluntary supply cuts and these countries combined (Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman) make up just 30pc of world output.

Mr Macpherson said: “It is becoming ever harder for Opec+ to convince markets that it is able to support price stability when the proportion of output it has effective control over is limited.”

Just as oil prices fell, European gas prices jumped by 13pc to the highest level seen this year after an outage at a gas processing plant in Norway, Europe’s largest supplier.

The European benchmark TTF surpassed €38 per megawatt hour before falling back to €36.80.