The Organisation of Petroleum Exporting Countries (OPEC) has agreed to increase oil production for the second time in two months, adding 411,000 barrels per day to its production quota in June.
According to a report by Reuters, the increase is despite falling prices and expectations of weaker demand.
“Following an online meeting lasting just over an hour, the producer group announced the supply increase, saying the fundamentals of the oil market were healthy and inventories were low.”
Recall that oil prices fell to a four-year low in April, below $60 per barrel, after OPEC+ announced a bigger production boost for May, and as US President Donald Trump’s tariffs raised concerns of global economic weakness.
The report noted that Saudi Arabia is pushing OPEC+ to stop output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas.
The June increase from the eight will take the total combined hike for April, May and June to 960,000 bpd, representing a 44% unwinding of the 2.2 million bpd cut, according to Reuters calculations.
Brent crude futures lost more than 1% on Friday to $61.29 a barrel as traders braced for more oil from OPEC+.
Oil prices will fall on Monday due to the OPEC+ news amid trade tensions and concerns about economic growth, said UBS’s analyst Giovanni Staunovo.
Kazakhstan defied OPEC+ this month when its energy minister said he would prioritise national interests over those of the OPEC+ group when deciding on oil production levels. Kazakhstan’s April oil output exceeded its OPEC+ quota despite a 3% fall.
OPEC+, which includes the Organisation of the Petroleum Exporting Countries and allies such as Russia, is still cutting output by almost 5mbpd and many of the cuts are due to remain in place until the end of 2026. The group plans to hold a full ministerial meeting on May 28.
While the increase means Nigeria may benefit from increasing its 1.5m quota allocated by OPEC+, the effect of further drop in oil price will affect the government’s plan to generate N84.67tr from the sale of crude oil in 2025.
The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, disclosed that the 2025 budget’s crude oil production target was 2.062 million barrels per day and the plan is to sell the crude at $75 per barrel.
Even though Nigeria was able to surpass the 1.5m bpd in January, it failed to keep the momentum for February and March.
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