Oil plunges as OPEC+ shocks with supply increase
Brent crude’s price tumbled as the global oil market reacted to an unexpected supply boost from eight members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+).
PHOTO: Flag of OPEC. Getty Images
The eight OPEC+ members - Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman - have announced a surprise agreement to increase supply by 411,000 b/d in May.
The coalition attributed the decision to “healthy market fundamentals and the positive market outlook” as it aims to gradually phase out its collective 2.2 million b/d cuts between April 2025 and June 2026.
The countries had previously planned to increase supply by 135,000 b/d in May. “Crude oil prices slumped further after OPEC stunned the market with a policy switch on oil supply,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.
OPEC’s de-facto leader Saudi Arabia is now slated to produce 9.2 million b/d in May. Russia’s output will surpass 9 million b/d, while Iraq and the UAE will produce over 4 million b/d and 3 million b/d, respectively, the OPEC secretariat said.
“At this stage it appears to be a once-off increase,” Hynes said. The group has also reaffirmed its commitment to ensure that the overproducing countries compensate for the excess output in the coming months.
The news emerges amid growing turbulence in the commodities market, already unsettled by US President Donald Trump’s tariff threats, which could slow demand growth, analysts say.
“Oil prices had their worst day since 2022 thanks to new tariffs and a surprise OPEC+ supply increase hitting the market,” two analysts from ING Bank said. “Possibly, the group feels that the prospect of stricter [US] sanctions against Venezuela and Iran allows them to increase supply,” they added.
The eight countries will meet again on 5 May to decide on June production levels, according to the OPEC statement.
By Aparupa Mazumder
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