Oil Prices in Flux: OPEC+ to Boost Supply Despite Recent Price Drop

Oil prices are in complete chaos, so far this year at least. With faltering demand levels weighing down the overall price levels, the OPEC+ group announced another output hike this year. What unsettled the commodity market even more was that the planned output increase was larger than anticipated.

On Saturday, major producers, including Saudi Arabia and Russia, agreed to boost collective oil production by 411,000 barrels per day (bpd). This figure is nearly three times the volume initially expected, according to reports.

The output hikes will come into effect in June month. Saudi Arabia, the de facto leader of oil-producing nations, seems to focus more on punishing those players (Kazakhstan and Iraq) who exceeded their production quotas.

Crude oil prices have already witnessed the worst monthly decline since November 2021 as fears of demand shock continue to loom large. The WTI crude oil index (the benchmark for the US oil market) was trading just around $58. Whereas, Brent futures hovered around $60 level earlier this week. All this comes at a time when China's oil imports have been on a downward spree.

Oil Price Outlook

While lower oil prices are expected to hit all oil-producing countries, big players like Russia and Saudi Arabia have more capacity to take in the losses as compared to smaller players. Meanwhile, commodity analysts have already started to cut their oil price targets.

Goldman Sachs has cut its year-end oil price forecasts by $5, now projecting $66 for Brent and $62 for WTI. The revision was attributed to increasing OPEC+ supply and a wave of tariffs introduced by Trump. "We no longer forecast a price range," Goldman reportedly said, "because price volatility is likely to stay elevated on higher recession risk."

Standard Chartered followed suit and slashed its Brent forecast to $61 per barrel for this year. Trump's tariff play, which is inducing recession fears, might worsen the overall outlook. As for OPEC+ nations, maintaining high prices doesn't appear to be a priority at this point.