Umair
Eight members of the OPEC Plus oil cartel, led by Saudi Arabia, said Thursday that they would accelerate their previously planned schedule to gradually add about 2.2 million barrels a day to the oil market.
The producers, including Russia, will add a combined 411,000 barrels a day in May, equivalent to three monthly increases, they said in a news release. They had already agreed in March to begin producing more oil this month.
Oil prices fell sharply on Thursday, weighed down by both the fear that increasing trade frictions would torpedo global growth and the prospect of increased supplies of oil. Brent crude, the international benchmark, fell 6 percent, and West Texas Intermediate, the American standard, dropped 6.6 percent.
The falling oil prices were a rare bit of good news for the global economy on a day when stock markets around the world plummeted after President Trump unveiled tariffs on America’s trading partners.
The decision could be seen as a gesture to Mr. Trump, who has sought to lower gas prices for American consumers, by some members of the group, especially Saudi Arabia. The kingdom has responded warmly to Mr. Trump’s re-election. Recently, it has acted as host for talks, led by Trump administration officials, aimed at ending the war in Ukraine, which Russia invaded in 2022.
The countries said in a news release that they were acting “in view of the continuing healthy market fundamentals.”
“While officials insist the move was not designed to appease Washington, President Trump will undoubtedly welcome lower prices,” wrote Helima Croft, global head of commodity strategy at the investment bank RBC Capital Markets, in a research note on Thursday.
Ms. Croft said the move was also intended to send a message that the Saudis would not tolerate it if other members of the group exceeded their quotas and would not hesitate to increase production to drive down prices and punish “cheaters.”
“It is a high-wire move, but I think it is intended to establish credibility/deterrence,” Ms. Croft said.
Just five years ago, the Saudis ramped up output to prod Russia to continue cooperating with market management.
If such a warning was intended on Thursday, Kazakhstan would be a likely target, Ms. Croft said. She estimated that Kazakhstan exceeded its quota by 700,000 barrels a day in March. A Chevron-led expansion of the Tengiz oil field near the Caspian Sea promises to add even more oil.
