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OPEC+ speeds up oil output hikes, oil drops
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OPEC+ speeds up oil output hikes, oil drops
Apr 3, 2025 6:17 AM

LONDON/MOSCOW, April 3 (Reuters) - Eight OPEC+ countries

agreed on Thursday to advance their plan to phase out oil output

cuts by increasing output by 411,000 barrels per day in May, an

unexpected decision that prompted oil prices to extend earlier

losses.

Oil, which was already down over 4% on U.S. President Donald

Trump's announcement of tariffs on trading partners, extended

declines after OPEC updated its plans in a statement, with Brent

crude dropping over 6% towards $70 a barrel.

Eight members of OPEC+, which includes the Organization of

the Petroleum Exporting Countries and allies led by Russia, had

been scheduled to raise output by 135,000 barrels per day in May

as part of a plan to gradually unwind their most recent layer of

output cuts.

But after a meeting of the eight countries held online on

Thursday, the group announced it would boost output by 411,000

bpd in May. OPEC cited "continuing healthy market fundamentals

and the positive market outlook."

"This comprises the increment originally planned for May in

addition to two monthly increments," OPEC said in a statement

referring to the volume. "The gradual increases may be paused or

reversed subject to evolving market conditions."

The May hike is the next increment of a plan agreed by

Russia, Saudi Arabia, UAE, Kuwait, Iraq, Algeria, Kazakhstan and

Oman to gradually unwind their most recent output cut of 2.2

million bpd, which came into effect this month.

OPEC+ also has 3.65 million bpd of other output cuts in

place until the end of next year to support the market.

FOCUS ON COMPLIANCE

The decision on Thursday partly reflects OPEC+ leaders' wish

to improve compliance with production quotas, analysts said.

"OPEC+ focus is on compliance and this decision forces the

laggards to step up compliance," said Amrita Sen, co-founder of

Energy Aspects.

Record output in Kazakhstan has angered several other

members of the group, including top producer Saudi Arabia,

sources have told Reuters. OPEC+ is urging the Central Asian

country, among other members, to make further cuts to compensate

for excess production.

Kazakhstan has been producing oil well above the targets

agreed with OPEC+ in recent months. OPEC data also shows some

other OPEC+ nations such as the United Arab Emirates, Nigeria

and Gabon pumping above their quotas, but by far smaller

amounts.

Production in Kazakhstan could drop this month and exports

could decline after Russia ordered to shut some export capacity

on the CPC pipeline, the main evacuation route for oil in

Kazakhstan produced by oil majors such as U.S. Chevron and Exxon

Mobil.

The eight OPEC+ countries will meet on May 5 to decide on

June output, OPEC's statement said.

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