In a notable policy shift, OPEC+ has opted to raise oil output by 411 thousand barrels per day (kb/d) in May, significantly exceeding the previously anticipated 135 kb/d adjustment. This decision effectively fast-tracks the implementation of July’s production quotas, diverging from the alliance’s earlier pattern of gradual monthly increases.
A Phased Exit from Supply Cuts
The move aligns with OPEC+’s broader strategy to gradually unwind its voluntary production cuts, which currently total 2.5 million barrels per day (mb/d). The group had previously signaled its intent to fully phase out these restrictions by September 2026, coinciding with annual global demand growth projections of 1.2–1.5 mb/d.
Market Impact: Balancing Supply and Demand
While the decision introduces additional supply into the market, it remains consistent with OPEC+’s measured approach to managing output in line with consumption trends. We maintain our Brent crude price forecast at $70 per barrel for 2025.
The Role of U.S. Production in Market Stability
A key factor in maintaining equilibrium will be U.S. shale production, where the breakeven cost for new drilling averages $69 per barrel. Should prices approach this level, a natural slowdown in American output growth could help mitigate excessive volatility.
OPEC+’s latest decision reflects a strategic calibration rather than an abrupt shift. The interplay between global demand recovery, OPEC+ supply policies, and non-OPEC production economics will continue to shape market dynamics in the coming months.