Key facts
- OPEC+ plans to increase its combined oil supply by 411,000 barrels per day in June.
- The cartel's decision follows a period of attempting to boost prices through supply cuts.
- Falling oil prices are partly attributed to expectations of a global economic downturn and U.S. tariffs.
- OPEC+ produced less oil in April than anticipated, despite overproduction by some members.
- U.S. inflation in April saw its lowest rate in two years, rising by a modest 0.2%.
OPEC+ has decided to increase its combined oil supply by 411,000 barrels per day in June, signaling a shift in strategy after more than two years of attempting to drive up prices through production cuts. This decision comes amid easing pressure on oil supplies due to U.S.-Iran talks and persistent market volatility.
Analysts suggest that OPEC+ has come to terms with factors beyond its control, such as expectations of a global economic downturn partly fueled by U.S. tariffs, which have led to revised global GDP growth and oil price outlooks. Bill Farren-Price, a senior research fellow at the Oxford Energy Institute, noted that the cartel cannot push against such strong macroeconomic forces.
Some observers speculate that Saudi Arabia, an informal leader of OPEC, may have sought to align with President Trump's preference for lower oil prices. Additionally, the decision could be a response to continued overproduction by members like Iraq and Kazakhstan.
Despite plans for output hikes, OPEC+ actually produced less oil in April than anticipated, a development that, along with positive signals from U.S.-China trade talks and lower-than-expected U.S. inflation (0.2% in April), has contributed to a reversal of the oil price rout. Robust oil demand, partly driven by lower prices, is also supporting the market, with China increasing its crude imports.