[LONDON/DUBAI] Opec+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, has agreed to accelerate oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day (bpd), the group said on Saturday (May 3), despite falling prices and expectations of weaker demand.
Following an online meeting lasting just over an hour, the producer group announced the supply increase, saying the fundamentals of the oil market were healthy and inventories were low.
Oil prices fell to a four-year low in April below US$60 per barrel after Opec+ announced a bigger-than-expected production boost for May, and as US President Donald Trump’s tariffs raised concerns of global economic weakness.
Opec+ sources have said Saudi Arabia is pushing Opec+ to accelerate the unwinding of earlier output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas.
The hikes also follow calls from Trump on Opec+ to raise output. Trump will visit Saudi Arabia later in May.
In December, eight Opec+ countries that have been implementing the group’s most recent output cut of 2.2 million bpd agreed to gradually phase it out in monthly increases of about 138,000 bpd from April 2025.
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The June increase from the eight will take the total combined hike for April, May and June to 960,000 bpd, representing a 44 per cent unwinding of the 2.2 million bpd cut, according to Reuters calculations.
Brent crude futures lost more than 1 per cent on Friday to US$61.29 a barrel as traders braced for more oil from Opec+.
Oil prices will fall on Monday due to the Opec+ news amid trade tensions and concerns about economic growth, said UBS’s analyst Giovanni Staunovo.
“We continue to call this a ‘managed’ unwind of cuts and not a fight for market share”, he said.
After his participation, Kuwait’s oil minister said the Opec+ meeting on Saturday would significantly affect production policy formulation in the coming period.
Reuters reported this week that officials from Saudi Arabia, the de facto leader of Opec+, have briefed allies and industry officials that they are unwilling to prop up oil markets with further supply cuts.
“Compliance again appears to be the key focus, with Kazakhstan and Iraq continuing to miss their compensation targets, alongside Russia to a lesser extent,” said Helima Croft of RBC Capital Markets.
Kazakhstan defied Opec+ this month when its energy minister said he will prioritise national interests over those of the Opec+ group when deciding on oil production levels. Kazakhstan’s April oil output exceeded its Opec+ quota despite a 3 per cent fall.
Opec+ is still cutting output by almost five million bpd and many of the cuts are due to remain in place until the end of 2026. The group plans to hold a full ministerial meeting on May 28. REUTERS
