Oil prices react to OPEC+ output hike
Oil prices fell more than USD 2 a barrel on May 5 as OPEC+ looks to accelerate oil output growth, raising concerns about oversupply in the market.
Economic Truth reported this with reference to Reuters.
The report said that Brent crude futures fell USD 2.21, or 3.61%, to USD 59.08 a barrel.
US West Texas Intermediate crude was trading at USD 56.00 a barrel, down USD 2.29, or 3.93%, from earlier.
Both positions hit their lowest since April 9 at the opening of trading on Monday after OPEC+ agreed to accelerate oil output growth for a second consecutive month, increasing output in June by 411,000 barrels per day (bpd).
According to Reuters calculations, the June output increase from eight countries will bring the total combined output increase for April, May and June to 960,000 bpd, a 44% reduction from the 2.2 million bpd agreed from 2022.
“OPEC+’s decision on May 3 to increase production quotas by a further 411,000 bpd for June reinforces market expectations that the global supply-demand balance is moving into surplus,” said Tim Evans, founder of Evans on Energy.
OPEC+ sources said the group could completely cancel its voluntary cuts by the end of October if its members do not improve compliance with their production quotas.
OPEC+ sources said Saudi Arabia is pushing OPEC+ to accelerate the rollback of previous production cuts to punish fellow OPEC members Iraq and Kazakhstan for failing to meet their production quotas.
Barclays and ING also cut their Brent oil price forecasts following the OPEC+ decision.
Barclays cut its Brent price forecast by USD 4 to USD 66 per barrel in 2025 and by USD 2 to USD 60 per barrel in 2026, while ING expects Brent to average USD 65 this year, down from USD 70 previously.
As the Ukrainian News agency earlier reported, the largest oil refiners in China and Turkey have resumed purchases of russian crude, not considering political risks but price gains: the Urals price has fallen below USD 60, which formally allows them to avoid sanctions pressure.