Oil prices may fall as OPEC+ plans to boost production in June
Photo: In June, the total increase in production over the three months will be 960,000 barrels per day (Getty Images)
OPEC+ has agreed to accelerate the pace of oil production growth for the second month in a row. In June, production will increase by 411,000 barrels per day, despite falling prices and expectations of lower demand, Reuters reports.
Following an online meeting that lasted just over an hour, the group of producers announced an increase in supply, stating that oil market fundamentals remain healthy and inventories are lower.
Sources within OPEC said that Saudi Arabia is pushing the oil alliance to accelerate the unwinding of previously agreed production cuts in order to punish fellow members Iraq and Kazakhstan for failing to comply with production quotas. In particular, they are breaching agreements by producing more than allowed.
The increase also followed calls by US President Donald Trump for OPEC+ to boost output. Notably, Trump will visit Saudi Arabia in May.
According to Reuters' estimates, in June eight countries will raise production to such an extent that the total increase over three months (April, May, and June) will amount to 960,000 barrels per day. This means that nearly half (44%) of the previous 2.2 million barrel cut will be reversed.
UBS's analyst Giovanni Staunovo believes that oil prices will drop on Monday in response to the OPEC+ news amid trade tensions and concerns over economic growth.
Reuters notes that in April, oil prices dropped to a four-year low - below $60 per barrel. This followed OPEC+'s announcement of a larger-than-expected increase in May production, while Trump's tariffs further fueled concerns over global economic weakness.
It's also noted that Brent crude futures lost more than 1% on Friday, falling to $61.29 per barrel, as traders are prepared for increased oil supply from OPEC+.
Previously, in December, the eight OPEC+ countries that implemented the group's last production cut of 2.2 million barrels per day agreed to gradually phase it out with a monthly increase of 138,000 barrels per day starting in April 2025.
Moscow expects oil price collapse
Russia's Ministry of Finance recently raised its projected budget deficit for 2025 to 1.7% of GDP, up from the previously expected 0.5%. This is due to expectations of a prolonged period of low oil and gas prices.
In particular, oil and gas revenue was downgraded by 24% to 8.32 trillion rubles ($101.47 billion). Moreover, the spending plan for the current year was increased by 830 billion rubles.
