Eight member countries of the extended Organization of the Petroleum Exporting Countries (OPEC+) announced, on May 5, their intention to maintain increased crude oil production levels throughout June, causing oil prices to fall to their lowest levels since 2021. Brent crude dropped just over a dollar (-$1.06) to $60.23 per barrel (bbl), while West Texas Intermediate (WTI) declined by $1.16, reaching $57.13/bbl.
The OPEC+ members, who met virtually on May 3, —Saudi Arabia, Algeria, the United Arab Emirates, Iraq, Kuwait, Kazakhstan, Oman, and Russia— agreed to raise production by 411,000 barrels per day (bpd) in June. “The gradual increases may be paused or reversed depending on market conditions. This flexibility will allow the group to continue supporting oil market stability,” stated the oil cartel.
According to analyst Kyle Rodda, this production increase means that “any price rebound will depend on an improvement in market conditions, which in the near term are tied to U.S. trade policy.”
Rob Thummel, portfolio manager at Tortoise Capital, stated that global oil markets could face a supply surplus of up to 500,000 bpd starting in June, potentially pushing prices down to $50/bbl. “Analysts did not expect the eight OPEC+ countries to increase crude output for a second consecutive month, especially amid so much economic uncertainty,” Thummel said.
In the banking sector, Barclays lowered its average price forecast for Brent crude this year by $4 to $66/bbl and by $2 to $60/bbl for 2026. ING now estimates Brent will average $65 this year, down from a previous estimate of $70.
However, while low oil prices are generally viewed as negative for U.S. producers, President Donald Trump saw them as a political advantage. “We are in a good position to reach a deal with Russia, since oil prices have gone down,” Trump told the press on May 5, referring to ongoing negotiations related to the war in Ukraine. According to some analysts, a drop in crude prices would affect Moscow—but also all producers, including OPEC members and major U.S. oil companies.
