On Thursday, eight OPEC+ nations reached an unexpected consensus to expedite their strategy for phasing out oil production cuts, opting to raise output by 411,000 barrels per day in May. This decision led to a continuation of the significant declines in oil prices observed earlier. Oil prices, having already decreased by more than 4% following U.S. President Donald Trump’s tariff announcement on trading partners, continued to fall after OPEC released an updated statement. Consequently, Brent crude experienced a decline exceeding 6%, falling below $70 per barrel.
Eight members of OPEC+, comprising the Organization of the Petroleum Exporting Countries and allied nations led by Russia, were set to increase production by 135,000 barrels per day in May, aligning with a strategy to methodically reverse their latest series of output reductions. Following an online meeting of the eight nations on Thursday, the coalition declared an increase in production by 411,000 barrels per day for May. OPEC referenced the persistence of robust market fundamentals alongside an optimistic market outlook. “This includes the increase initially scheduled for May along with two subsequent monthly increments,” OPEC stated in a release concerning the volume. “The incremental adjustments could be suspended or undone in response to changing market dynamics.”
The rise in supply will alleviate concerns stemming from potential disruptions to Iranian production as Trump reinstates maximum pressure on Tehran, which is also a member of OPEC. The President of the United States, having urged OPEC to reduce prices since the commencement of his second term, is likely to travel to Saudi Arabia as early as next month. The upcoming increase in May represents the next step in a coordinated strategy among Russia, Saudi Arabia, the UAE, Kuwait, Iraq, Algeria, Kazakhstan, and Oman to methodically reverse their latest production reduction of 2.2 million barrels per day, which was implemented this month.
OPEC+ has implemented additional output reductions totaling 3.65 million barrels per day, which will remain in effect until the conclusion of the following year, aimed at bolstering market stability. The aggregate figure of 5.85 million barrels per day represents approximately 5.7% of the worldwide supply. The decision made on Thursday is indicative of OPEC+ leaders’ intent to enhance adherence to production quotas, according to analysts.
Record production levels in Kazakhstan have provoked discontent among various members of the coalition, notably including leading producer Saudi Arabia, according to sources cited by Reuters. OPEC+ is advocating for the Central Asian nation, along with other member states, to implement additional production cuts to address the issue of surplus output. Production in Kazakhstan may experience a downturn this month, with exports likely to diminish following Russia’s directive to close certain export capacities on the CPC pipeline, which serves as the primary evacuation route for oil produced by major companies including U.S. Chevron and Exxon Mobil. The eight OPEC+ nations are scheduled to convene on May 5 to deliberate on production levels for June, according to OPEC’s announcement.