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In a surprise move, eight key OPEC+ producers agreed yesterday to increase their combined crude oil output by 411,000 barrels per day (bpd), starting in May. This decision exceeded expectations, as the group was anticipated to implement a more modest hike of under 140,000 barrels per day.

The agreement was reached during a virtual meeting attended by Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman. The meeting aimed to review global market conditions and determine the best course of action for oil production.

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According to OPEC, the agreed-upon hike is “equivalent to three monthly increments”. The organisation noted that “the gradual increases may be paused or reversed subject to evolving market conditions.”

The decision had an immediate impact on oil prices, with the Ice Brent contract for June delivery plummeting 5.94% to $70.50 per barrel. Similarly, the front-month May Nymex WTI contract fell 6.41% to $67.11 per barrel.

This move marks a significant shift in the group’s production strategy, as the eight OPEC+ producers began unwinding 2.2 million barrels per day of voluntary cuts this month. The broader 22-member OPEC+ alliance has roughly 3.66 million barrels per day of separate cuts in place until the end of 2026

The meeting also marked the first attendance by Erlan Akkenzhenov, Kazakhstan’s new energy minister. Kazakhstan has struggled to produce above its assigned quota, and OPEC’s statement hinted at the need for participating countries to “accelerate their compensation” through additional production cuts.

The decision comes amidst broader market turmoil, triggered by the U.S. administration’s announcement of sweeping tariffs on key trade partners. The move has sparked concerns about the impact on global trade and economic growth.

As the oil market continues to evolve, the OPEC+ producers’ decision will likely have far-reaching implications for the global energy landscape

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