OPEC Signals Full Speed Ahead With Output, Crude Prices Drop Yet Again

Meanwhile, Trump says cheap oil is working in his favour: File Image/Pixabay

The by now-familiar plan of the Organization of the Petroleum Exporting Countries (OPEC) to accelerate output in June was finally ratified on Monday, causing oil prices to plumb lows not seen since 2021.

Brent settled down $1.06 at $60.23 per barrel, while West Texas Intermediate settled down $1.16 at $57.13 per barrel.

OPEC members on Saturday agreed to raise output by 411,000 barrels per day (bpd) next month, to reach 957,000 bpd in June; the cartel wrote in a statement: "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."

Kyle Rodda, senior market analyst at Capital.com Australia, said, "The outlook is more demand driven at the moment because the Saudis have effectively taken their hands off the wheel when it comes to supply.

"Now that it's gone and OPEC+ is going to crank up production, any rebound in prices will be down to an improvement in growth conditions — which in the immediate future is all tied to U.S. trade policy."

For his part, Rob Thummel, senior portfolio manager at Tortoise Capital, predicted that global oil markets would be oversupplied by as much as 500,000 bpd starting in June, which could push prices to the low $50s: "Analysts did not expect the eight OPEC+ countries to accelerate the return of oil volumes for a second consecutive month — especially amid such economic uncertainty."

Meanwhile, Barclays reduced its Brent forecast for this year by $4 to $66 per barrel and by $2 to $60 for 2026; ING calculated that Brent will average $65 this year, compared to $70 in its previous estimate.

However, while low oil prices were viewed as bad for U.S. producers, U.S. president Donald Trump regarded them as good news politically.

Specifically, he told media on Monday, "We're in a good position to settle with Russia as oil prices are down," referring to ongoing negotiations related to the war in Ukraine.

This prompted Oilprice.com to note that Trump's comment followed OPEC's announcement, and that "a quota hike makes more sense if it's part of a backroom maneuver orchestrated by Trump to squeeze Moscow by hammering oil revenues…….if true, the pain wouldn't stop at the Kremlin's doorstep—lower prices hit all producers, including OPEC members themselves and even U.S. super majors."