Opec+ eight to speed up unwinding crude cuts from May

: Crude oil
25/04/03

A core group of eight Opec+ crude producers in a surprise move today have sped up plans to gradually unwind some 2.2mn b/d of production cuts by upping output by 411,000 b/d in May.

"In view of the continuing healthy market fundamentals and the positive market outlook… the eight participating countries will implement a production adjustment of 411,000 b/d equivalent to three monthly increments, in May 2025," said the group comprising Saudi Arabia, Russia, the UAE, Kuwait, Iraq, Algeria, Oman and Kazakhstan.

The decision to increase output by 411,000 b/d in May will kick in with the start of the summer season in the northern hemisphere when oil demand typically picks up. But it also comes on the heels of the US announcing sweeping new global tariffs for a range of imports.

Ice Brent crude futures were down by more than 6pc from the close on 2 April, at $70.15/bl at 13:04 GMT, after briefly dipping below $70/bl earlier today, following the two announcements.

The administration of US president Donald Trump could welcome today's Opec+ decision. Trump had already made calls to the Opec group to "bring down the cost of oil" — something that could be achieved by raising output.

The eight Opec+ countries last month decided to proceed with a plan to begin gradually unwinding some 2.2mn b/d of production cuts from April and over an 18-month period — pushing their combined output targets up by 137,000 b/d averaged on a monthly basis through September 2026. The monthly increases could end up being smaller as seven of the eight countries, excluding Algeria, have committed to compensating for past overproduction.

The Opec+ group of eight today maintained that increases may be paused or reversed subject to evolving market conditions. "This flexibility will allow the group to continue to support oil market stability," it said, adding that the measure "will provide an opportunity for the participating countries to accelerate their compensation".

But the group's commitment to voluntary production adjustments and compensation for overproduction has been shaky at best. Opec+ secondary sources pointed to overproduction from Saudi Arabia, Russia, the UAE, Kuwait, Iraq, Oman and Kazakhstan since the start of last year. The countries submitted new compensation plans to the Opec secretariat late last month.

The implementation of the compensation cuts in the coming months has become essential for the group, in order to try and balance the planned gradual increases and ensure markets are not oversupplied.

By Bachar Halabi

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