OPEC+, during a digital meetup on Saturday, made an official announcement raising the collective output by 411,000 bpd. The hike is almost thrice the volume that was previously scheduled for June. This move is a clear indication that OPEC+ is going to take a U-turn from its efforts to defend the oil prices. Instead, Riyadh is now going to opt for a low-price strategy with the objective of punishing members like Kazakhstan and Iraq, which are currently overproducing. The announcement sent the oil market tumbling to a record low. If you are someone who wants more details about the OPEC+ price hike, the following article is for you.
What Did Jorge Leon Say About The OPEC+ Output Hike?
Jorge Leon from Rystad Energy believes that OPEC+ has just thrown a bombshell over the global oil market. With the latest hike in output, Saudi Arabia seems like it is planning to punish the members who are not complying. It also seems like Saudi Arabia is trying to find the favor of US President Donald Trump. President Trump has always been an advocate of lower oil prices. The Trump tariffs had the global markets witnessing significant declines. With this decision, OPEC+ seems to be aligning itself with Washington’s inflation-fighting agenda.
Oil Prices Tumble To A Record Four-Year Low
The global oil market was already experiencing severe pressure, while Brent was trading at around $61 per barrel this Friday. The announcement from OPEC+ had the oil markets tumble even further. It witnessed a significant 6% decline, which was a compounded effect of both the rapidly increasing trade war fears and recession risks.
How Did Goldman Sachs, Standard Chartered, And JPMorgan React To The Output Hike?
Goldman Sachs reacted to the output hike as well and slashed its December 2025 oil forecast to $66 for Brent and $62 for WTI. It also stated that it will not forecast a price range anymore, as the price volatility will possibly remain high. Standard Chartered cut its Brent forecast for 2025 down to $61 per barrel and the outlook for 2026 down to $78. It even issued a warning regarding Trump’s tariffs and rapidly increasing fears of an upcoming recession. JPMorgan, on the other hand, increased the global recession odds as high as up to 60% for this year. S&P Global issued a warning regarding a possible decline in demand growth for oil by 500,000 bpd.
How Did OPEC+ Try To Justify The Output Hike?
OPEC+ made an attempt to justify the output hike by referring to the continuing healthy market fundamentals. However, others regard this decision as an attempt to assert market share and impose compliance. Helima Croft, an analyst, explained how Saudi Arabia is trying to reassert its control over members who are not complying. Its decision indicates that Riyadh is now ready to let the prices decline to discipline the market. According to reports, the eight members behind this decision are going to reassess in the month of June. However, for now, OPEC+ has made it pretty clear that it is going to stop defending high prices. This means the fears of volatility in the global oil market are going to increase from now on.
