Five of the eight key producers in the OPEC+ coalition have defiantly stood their ground. They’ve pledged to increase crude oil production by gargantuan amounts, driving prices down to the lowest levels in a quarter century. The bloc has begun to unwind the voluntary cuts of 2.2 million bpd that they once agreed to take on. This decision is historic and unique compared to the longstanding production policy of the 22-member strong OPEC+ alliance. This birdshot move toward reopening comes at a time of considerable market anxiety caused by the longer-term impacts of new tariffs of the U.S. administration.
At a meeting on Thursday, OPEC+ producers voted unanimously to increase their collective crude oil production. Notably, this was the first COP for Kazakhstan’s new energy minister, Erlan Akkenzhenov, who figured prominently in negotiations on just energy transitions. These rate hikes are intended to quicken the speed of planned increases, a sign that the Fed is getting ahead of quickly changing market developments. The May rise is described as historic, as it is “the equivalent of three monthly increases,” OPEC stated.
Kazakhstan’s participation is especially interesting, for the central Asian nation has long struggled to achieve levels of production above its given quota. The changes the eight producers have wrought on their own far exceed the cuts now in effect. Those wider cuts total 3.66 million bpd and are slated to last until the end of 2026.
The implementation of these adjustments comes at the same time as a major decline in oil prices. On Tuesday, the front-month May Nymex West Texas Intermediate (WTI) contract tumbled to settle at $67.11/b, or 6.41% lower. Many factors contributed to this decline. Perhaps the most powerful factor of all is the effect of recent controversial tariff announcements by U.S. President Donald Trump’s administration, which have deeply unsettled global market stability.
Just about everyone had thought that the decision would be an increase in output. Projections expect that rise to be more than 140,000 barrels per day for the month ahead. OPEC has indicated that “the gradual increases may be paused or reversed subject to evolving market conditions,” emphasizing the need for flexibility in their approach.
OPEC has stated that these measures “provide an opportunity for the participating countries to accelerate their compensation,” highlighting the importance of managing production levels in response to market fluctuations.