LONDON/MOSCOW, April 3 (Reuters) – OPEC+ countries surprised the market on Thursday by agreeing to increase their oil production more than initially planned, raising output by 411,000 barrels per day (bpd) in May. This decision led to a further drop in oil prices, which were already down over 4% following U.S. President Donald Trump’s announcement of tariffs on trading partners.
After OPEC+ updated its output plan, Brent crude prices fell sharply, dipping more than 6% to below $70 a barrel. The group, which includes OPEC members and allies led by Russia, had originally planned to raise output by 135,000 bpd in May as part of a gradual reduction of previous production cuts.
However, following an online meeting of eight OPEC+ members, the group announced it would increase output by 411,000 bpd in May. OPEC cited strong market fundamentals and a positive market outlook as reasons for the decision. The group also stated that these increases could be paused or reversed depending on future market conditions.
The increase is expected to alleviate concerns about potential disruptions to Iranian oil supplies, as U.S. President Trump reinstates pressure on Tehran. Trump, who has long criticized OPEC for high oil prices, may visit Saudi Arabia next month.
The decision is part of a broader plan agreed by Russia, Saudi Arabia, the UAE, Kuwait, Iraq, Algeria, Kazakhstan, and Oman to gradually unwind the 2.2 million bpd cut that started this month. OPEC+ also has an additional 3.65 million bpd of output cuts in place through the end of next year, totaling 5.85 million bpd or about 5.7% of global supply.
The move on Thursday also reflects OPEC+’s desire to improve compliance with production quotas. Analysts suggest that the decision aims to encourage lagging members to meet their targets. “OPEC+ focus is on compliance, and this decision forces the laggards to step up compliance,” said Amrita Sen, co-founder of Energy Aspects.
Kazakhstan, which has been producing oil above its agreed quota, has angered several OPEC+ members, including Saudi Arabia. OPEC+ is urging Kazakhstan, along with other countries like the UAE, Nigeria, and Gabon, to reduce production to make up for the excess.
Kazakhstan’s output may drop this month after Russia ordered a shutdown of some export capacity on the CPC pipeline, which is a major route for oil exports from Kazakhstan, including oil produced by companies like Chevron and ExxonMobil.
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