Oil Prices Tumble as OPEC+ Plans Faster Output Hikes
OPEC+ accelerates output hikes, causing a sharp drop in oil prices amid concerns of a potential market oversupply. In Asian trading, Brent crude futures fell by $2.21, or 3.61%, to $59.08 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $2.29, or 3.93%, to $56.00 a barrel.
Both oil contracts reached their lowest points since April 9, following OPEC+’s decision to raise production quotas for the second consecutive month. In June, OPEC+ will increase output by 411,000 barrels per day (bpd), bringing the total hikes for April, May, and June to 960,000 bpd. This increase marks a 44% reversal of the 2.2 million bpd of cuts implemented by OPEC+ since 2022.
OPEC+ Accelerates Output Hikes Amid Supply Concerns
Tim Evans, founder of Evans on Energy, noted that the May 3 decision to raise production by 411,000 bpd adds to the market’s expectation that the global oil supply and demand balance is heading toward a surplus. Depending on member compliance with manufacturing objectives, this might allow OPEC+ to completely unwind its voluntary cutbacks by the end of October 2025.
Oil futures have changed as a result of the increasing output and possible market excess. As a result of market predictions that supply will exceed demand, the six-month Brent price spread has turned into a contango. This change in price dynamics indicates that oil prices may remain lower in the short term.
OPEC+ and U.S. Oil Production Outlook
OPEC+’s move comes as oil analysts, including those from Barclays and ING, have revised their oil price forecasts downward. Barclays reduced its 2025 Brent crude forecast to $66 a barrel and its 2026 forecast to $60 a barrel, while ING revised its forecast for 2025 to $65 a barrel, down from $70 previously.
Barclays analysts suggest that while OPEC+ may phase out additional output cuts by October 2025, U.S.Growth in oil output is anticipated to decline. It is projected that this shift in supply dynamics will result in an increase in the world’s oil supply of 290,000 barrels per day in 2025 and 110,000 barrels per day in 2026.
Market Risks and Uncertain Demand
Geopolitical tensions and tariff uncertainties exacerbate the considerable demand uncertainty that still plagues the world oil market. Growing geopolitical tensions, especially in the Middle East, where the situation between Israel and Iran has prompted worries, are also having an impact on the oil market in addition to OPEC+’s policy adjustments.
Oil traders and experts are keeping a careful eye on events as supply rises and prices decline because they may indicate a change in the world’s energy picture.
Source: Yahoo
