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.
Important Disclaimer: The content of this article is provided for informational and educational purposes only. It reflects the author’s opinion based on information available at the time of publication, which may become outdated. This content does not constitute personalized investment advice, a recommendation to buy or sell, and does not guarantee future performance. Markets carry a risk of capital loss. The investor is solely responsible for their decisions and should consult an independent professional advisor before any transaction. The publisher disclaims all liability for decisions made based on this information.