OPEC+ Producers to Raise Crude Oil Output by 411,000 bpd, Oil Prices Drop
In a move that has significantly impacted global oil prices, eight major OPEC+ producers have agreed to raise their combined crude oil output by 411,000 barrels per day (bpd) starting in May. This decision comes as the group accelerates its planned production hikes, which contributed to a drop in oil prices. As of yesterday, the Ice Brent contract with June delivery was trading at $70.50 per barrel, reflecting a 5.94% decrease from Wednesday’s close. Meanwhile, the front-month May Nymex WTI contract was priced at $67.11 per barrel, down 6.41%.
The eight producers—Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman—held a virtual meeting to review current global market conditions and to make this decision, which came as a surprise to many analysts who had expected a smaller increase of just under 140,000 bpd for the coming month.
Bigger Hike Than Expected
The agreed-upon increase of 411,000 bpd is described by OPEC as “equivalent to three monthly increments,” signaling a quicker pace in unwinding the voluntary production cuts that were previously imposed by certain members. However, OPEC also stated that future increases could be paused or reversed depending on market conditions.
This increase comes on the heels of an ongoing gradual unwinding of 2.2 million bpd in voluntary cuts made independently by certain OPEC+ members. These cuts were separate from the broader 22-member OPEC+ alliance’s existing reductions, which total roughly 3.66 million bpd and will remain in place until the end of 2026.
Impact on Global Oil Markets
The decision by OPEC+ to speed up production hikes is likely to have widespread implications on the global oil market. While the hike aims to stabilize supply amid fluctuating demand, the immediate drop in oil prices suggests that market participants are reacting to a potential oversupply in the coming months.
