OPEC+ to Raise Oil Production by 411,000 bpd in May

The OPEC+ coalition has decided to significantly boost oil production, agreeing to increase output by 411,000 barrels per day (bpd) starting in May.

This decision, finalized during a ministers’ meeting on Thursday involving eight members of OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies led by Russia, had been scheduled to raise output by 135,000 barrels per day in May as part of a plan to gradually unwind their most recent layer of output cuts.

But after a meeting of the eight countries held online on Thursday, the group announced it would boost output by 411,000 bpd in May. OPEC cited “continuing healthy market fundamentals and the positive market outlook.

The move arrives as oil markets reel from U.S. President Donald Trump’s new tariff announcements, intensifying pressure on prices and raising concerns about global supply and demand dynamics.

Sharp Decline in Oil Prices Follows Announcement

Oil prices plummeted over 6% on Thursday, with Brent crude futures falling $4.93, or 6.58%, to $70.02 per barrel, and U.S. West Texas Intermediate (WTI) crude futures dropping $5.07, or 7.07%, to $66.64 per barrel by 1305 GMT.

The OPEC+ decision compounded existing market losses, which had already seen prices slide 4% before the meeting due to tariff-related fears. The accelerated output hike has heightened trader anxiety about an oversupplied market, further driving the sell-off.

Trump’s Tariffs Trigger Economic Concerns

The backdrop to OPEC+’s decision is President Trump’s unveiling of sweeping tariffs on Wednesday, imposing a minimum 10% duty on most U.S. imports, with steeper rates targeting goods from numerous countries.

While oil, gas, and refined products are exempt, as confirmed by the White House, the broader economic fallout has rattled investors. Fears of a global trade war loom large, threatening to stifle economic growth and curb fuel demand in the world’s largest oil-consuming nation.

Analysts Warn of Volatility and Downgrade Forecasts

Market analysts have reacted swiftly to the twin shocks of rising supply and trade tensions. UBS slashed its oil price forecasts by $3 per barrel for 2025-26, now projecting $72 per barrel, citing the risk of oversupply and weakened demand. Saxo Bank’s Ole Hansen noted, “First recession and demand fears driven by Trump’s tariff bazooka, and now the prospect for rising supply from OPEC+ has seen a two-day slump retracing more than half of last month’s gains.”

PVM’s Tamas Varga added, “Countermeasures are imminent, and recession and stagflation have become terrifying possibilities,” highlighting the inflationary burden tariffs place on consumers and businesses.

U.S. Crude Inventories Surge Unexpectedly

Adding fuel to the bearish fire, U.S. Energy Information Administration (EIA) data revealed a surprising 6.2 million-barrel increase in U.S. crude inventories last week.

This defied analyst expectations of a 2.1 million-barrel drawdown, amplifying concerns about excess supply. The unanticipated stockpile growth, combined with OPEC+’s production ramp-up, has deepened market unease, with traders bracing for heightened price volatility as trade negotiations and retaliatory levies unfold.

Market Outlook

The oil market now faces a complex interplay of rising production, potential demand erosion, and geopolitical uncertainty. OPEC+’s bold move to unwind output cuts faster than anticipated has amplified the downward pressure initiated by Trump’s tariffs.

While oil and gas imports escape direct tariff hits, the ripple effects on global trade and economic health could reshape global fuel consumption patterns. As the industry navigates these challenges, attention will remain fixed on supply adjustments and trade policy developments.

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