Oil price falls to $69 as OPEC+ members commence production increase

The Organization of Petroleum Exporting Countries and its allies (OPEC+) have decided to increase production by 411,000 barrels per day (bpd) in May.

In a statement on Thursday, the oil cartel said the move follows eight member countries’ decision, after a virtual meeting, to phase out oil output cuts.

The countries are Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman.

Following the production boost, Brent crude declined by 6.8 percent to $69.85 a barrel while US West Texas Intermediate (WTI) crude declined by 7.08 percent to $66.63, at 10 pm WAT.

According to Reuters, both developments are closely tied to the announcement of at least 10 percent tariffs on all goods coming into the country by United States President Donald Trump.

VOLUNTARY CUTS BY EIGHT OPEC+ MEMBER COUNTRIES

In April 2023, the eight OPEC+ countries announced additional voluntary downward adjustments of 1.65 million bpd, until the end of December 2026.

However, in November 2023, the countries announced an additional voluntary cut of 2.2 million bpd.

On December 5, 2024, the oil cartel said the countries will extend the adjustments until the end of March 2025, adding that the 2.2 million bpd adjustments would be gradually phased out on a monthly basis until the end of September 2026 “to support market stability”.

However, on March 3, the countries decided to proceed with a planned oil output increase from April 1.

MONTHLY PHASE-OUT OF OIL PRODUCTION BY 8 OPEC MEMBER COUNTRIES 

According to OPEC, the eight participating countries “will implement a production adjustment of 411 thousand barrels per day, equivalent to three monthly increments, in May 2025”.

“This comprises the increment originally planned for May in addition to two monthly increments. The gradual increases may be paused or reversed subject to evolving market conditions. This flexibility will allow the group to continue to support oil market stability,” OPEC said.

The oil alliance said the OPEC+ countries also noted that the measure would provide an opportunity for the participating countries to accelerate their compensation.

The oil cartel said eight countries will hold monthly meetings “to review market conditions, conformity, and compensation”.

The countries are expected to meet on May 5 to decide on June production levels.