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.