OPEC+ has confirmed that it will proceed with a slight increase in oil production in April, citing a “healthier oil market outlook.” The alliance remains optimistic about global oil demand, projecting growth of 1.4 million barrels per day (bpd) for both 2025 and 2026. However, this “healthier” outlook is likely not the main factor behind their decision to start easing the 2.2 million bpd production cuts, which have already been delayed multiple times.
The decision to add about 138,000 bpd in April appears to be a signal to the market of OPEC+’s bullish outlook while also potentially appeasing U.S. President Donald Trump, who has repeatedly urged the group to lower oil prices. While OPEC insists that it separates political considerations from market decisions, the current geopolitical landscape, coupled with an unpredictable U.S. administration, may be influencing the group’s approach.
The U.S. has intensified sanctions on countries like Venezuela and Iran, reducing their oil supply. The U.S. also revoked Chevron’s license to operate in Venezuela, a move that coincided with tariffs on Canadian and Mexican crude. This has left U.S. refiners who rely on heavy crude from the Americas with limited options. By restoring a modest 138,000 bpd of supply in April, OPEC+ sends a message that it is closely monitoring geopolitical developments and aims to avoid tensions with Trump.
Analysts also point out that OPEC+ members may be eager to capitalize on higher sales volumes, rather than continue restricting production in hopes of reaching the high oil prices needed to balance their budgets. After years of limiting output, OPEC+ members may be growing frustrated with the loss of market share to non-OPEC producers.
Ahead of this announcement, many analysts expected OPEC+ to once again delay the production increase to assess the impact of Trump’s policies. However, by implementing a small increase, OPEC+ seems to be trying to mitigate any backlash while signaling that it is attentive to the current situation.
Some analysts argue that OPEC+ could have waited until the second half of the year to make this move. However, RBC Capital Markets’ Helima Croft suggests that OPEC+ decided to act now to avoid market perception that the group’s fundamentals are weak every time a production increase is delayed.
The decision also benefits Russia, which is looking to align with the U.S. amid potential sanctions relief. Russia’s support for the minor increase is likely driven by its desire to maintain its position in the market.
Despite this small increase, OPEC+ has left open the possibility of adjusting its production strategy. The group stated that it remains “adaptable to evolving conditions” and could reverse or pause the increase depending on market developments.
Looking ahead, OPEC+ will continue to monitor the market and U.S. actions, particularly concerning sanctions and trade policies. The trade tensions between the U.S. and its major trading partners, which escalated this week, could dampen oil demand growth in both the U.S. and China. Additionally, RBC analysts warned that the U.S.-Canada trade war could trigger an economic shock, the largest since the 1930s, leading to inflationary pressures in the U.S.
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