The price of oil crashed on Thursday morning as OPEC+ announced it would be speeding up its planned increase in oil output by hiking production more than expected in May.
Just before 11 am EST, both international and domestic benchmark oil prices had dropped by more than $5 a barrel, with Brent Crude down $5.22 to trade at $69.75. West Texas Intermediate dipped by $5.45 to $66.26.
The plummeting prices appeared to be directly responding to Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman’s decision to increase oil production by 411,000 barrels a day starting in May.
This is dramatically higher than the roughly 137,000 that had been anticipated. OPEC+ said that next month’s increase is “equivalent to three monthly increments.”
The oil-producing bloc started to gradually ease production cuts of around 2.2 million barrels a day this month after nearly six months of delays. The group is looking to fully recover the cuts by September 2026.
In its release issued Thursday, the bloc explained that the planned gradual increases may be “paused or reversed” at any time due to evolving market conditions in order for the group to best support “oil market stability.’
It has yet to be seen if OPEC+ will set similar production level increases for June, or return to the original monthly increment. The group is set to meet on May 5 to discuss.
OPEC+’s announcement comes just one day after President Donald Trump announced sweeping tariffs on dozens of countries.
The energy industry was largely spared from the tariffs, which included a baseline 10% tariff on all exports to the United States, with minimal exceptions, and higher tariffs on nations with large trade surpluses with the U.S. The White House confirmed energy and energy products are exempt from these added tariffs.
Industry and trade experts have warned that Trump’s newer tariffs could result in slower global economic growth. This could result in reduced energy demand and thereby lower energy prices.
For months, concerns have spread throughout the fossil fuel industry that OPEC+’s output hikes and increases in domestic oil production promised by the Trump administration could drop prices to as low as $50 a barrel.
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While this would provide continued relief to consumers, it spells trouble for oil and gas companies looking to increase profits and drill new wells. In March, the Federal Reserve Bank of Dallas estimated that prices would need to sit at an average of $64 per barrel to support new drilling.
This contradicts the administration’s messaging, in which Energy Secretary Chris Wright has vowed U.S. oil can deliver on low prices and higher production at $50 a barrel.
