This increase builds upon the existing gradual rise of 138,000 bpd that began in April, as outlined in December 2024. The key players involved in Saturday's swift agreement included Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman.
The unexpected stance marks a significant shift from the organization's policy last year, when they implemented substantial production cuts of 2.2 million bpd, disregarding calls from consumer nations to maintain output. At the time, Saudi Arabia, the dominant force within OPEC+, cited the need for market stability as the rationale behind the cuts.
While publicly supporting the cuts as a measure to bolster prices, some OPEC+ members privately resisted the reduced quotas due to concerns about lost revenue. Consequently, certain nations, such as Iran and Kazakhstan, faced criticism from more influential members like Saudi Arabia for consistently exceeding their allocated production limits.
This week, even as oil prices fell below profitable levels for them, Saudi Arabia signaled its intention to boost production. The official announcement of a significant output increase now suggests a further decline in prices is likely. The production surge, combined with economic challenges in the world's two largest economies, China and the US, creates the potential for market jitters and a substantial drop in oil prices when trading resumes on Monday.
Furthermore, escalating tensions between India and Pakistan, along with stalled negotiations between Iran and the US, add to the negative pressures that could further depress commodity prices in the near future.
