OPEC+ Stuns Markets With Unexpected Oil Production Hike

The oil markets have been caught off guard. While traders anticipated a delay in the increase of oil production by OPEC+, the cartel finally confirmed that it would bring back 2.2 million barrels per day to the market starting in April. A decision that immediately triggered a brutal price reaction: the Brent barrel fell to $70.60, its lowest level in five months. This strategic choice, which comes after several successive delays, profoundly alters the balance of supply and demand in an already uncertain economic context.

An unexpected turnaround from OPEC+ that shakes up expectations

The announcement took everyone by surprise. Until now, Saudi Arabia and other influential OPEC+ members had repeatedly delayed the increase of their production, aiming to keep prices at a sustainable level. Yet, against all odds, the organization confirmed on Monday that it would proceed with a “gradual and flexible reintroduction” of 2.2 million barrels per day over a period of 18 months. This strategic turnaround marks a clear break from market forecasts.

The shock was immediate. Oil prices, already weakened by global economic uncertainties, plunged by 3 % in two days. Thus, the Brent, the international benchmark, fell to $70.60 per barrel, a drop of more than 10 % since its January peak at $82. This rapid decline reflects the panic of traders, who fear an oversupply in the face of uncertain demand. “Two things are hitting the market simultaneously: Trump’s tariffs and the resumption of OPEC+ production. It’s not surprising that this creates a sell signal for investors,” explains Kevin Book, an analyst at ClearView Energy Partners.

A decision with major strategic implications

The impact of this decision goes beyond a mere price correction. With this increase in production, OPEC+ is initiating a reorganization of its long-term strategy. Until now, the cuts decided by the cartel kept about 6 million barrels per day off the market, which represented nearly 6 % of global supply. Saudi Arabia alone had reduced its production by 2 million barrels daily over the past two years, bearing the brunt of the cuts.

This initiative could also rekindle tensions between OPEC+ and the United States. As early as 2022, Washington had attempted, unsuccessfully, to persuade Riyadh to increase its production in order to ease inflationary pressure on the U.S. economy. The failure of these negotiations marked a turning point in the relations between the two allies, and this new decision could prolong the period of diplomatic tensions.

Beyond the geopolitical power dynamics, one question remains: can OPEC+ maintain this increase without triggering a price collapse? According to Amrita Sen, an analyst at Energy Aspects, the additional supply should be absorbed by the market in the short term. However, she warns: “the risk of a production surplus could emerge at the end of the year, if demand growth slows more than expected.” If this is the case, the cartel may be forced to reconsider its strategy, at the risk of fueling increased volatility in the oil market.