OPEC+ nations surprised markets on Thursday by agreeing to accelerate planned oil production increases, compounding a sharp decline in crude prices already rattled by US President Donald Trump’s new global tariffs.
The decision saw Brent crude tumble over 6% to $70 a barrel, while US West Texas Intermediate crude futures were down 7.07%, at $66.64.
Eight OPEC+ members, including Saudi Arabia, Russia, and the UAE, agreed to boost output by 411,000 barrels per day (bpd) in May, triple the initially planned 135,000 bpd.
The move advances their strategy to unwind 2.2 million bpd of voluntary cuts introduced in April. OPEC+ cited “healthy market fundamentals” but warned adjustments could be “paused or reversed” if conditions shift.
The group also aims to enforce stricter compliance with production quotas. Kazakhstan, which has consistently exceeded its targets, faces pressure to compensate for overproduction. Recent Russian restrictions on the CPC pipeline, a key export route for Kazakh oil, may aid this effort. OPEC+ will reconvene on 5 May to decide June output levels.
Tariffs, oversupply fears fuel market rout
Oil prices had already slid 4% following Trump’s announcement of a 10% baseline tariff on most imports, stoking fears of a trade war dampening global growth. While energy imports were exempted, analysts warned secondary effects could curb fuel demand. UBS revised its 2025–26 oil forecasts down by $3 per barrel to $72, citing economic risks.
Further pressure came from US data showing a 6.2 million-barrel rise in crude inventories, contrary to expectations of a 2.1 million-barrel draw. “Countermeasures are imminent and judging by the initial market reaction, recession and stagflation have become terrifying possibilities,” said PVM analyst Tamas Varga, noting tariffs could inflate consumer costs and stifle economic recovery.
Kazakhstan’s record output has irked OPEC+ heavyweights, with the group urging compensatory cuts. Meanwhile, the UAE, Nigeria, and Gabon also pumped above quotas, albeit marginally.
Saxo Bank’s Ole Hansen highlighted the dual shock of tariffs and rising supply.
Unless secondary tariffs and direct sanctions remove barrels, traders will once again turn their attention to the risk of an oversupplied market hurting prices.
As OPEC+ navigates internal discipline and external economic headwinds, the oil sector braces for a turbulent period, with prices hinging on geopolitical manoeuvres and demand resilience.
