Shafaq News/ Eight OPEC+ countries unexpectedly agreed onThursday to advance their plan to phase out oil output cuts by increasingoutput by 411,000 barrels per day in May, a decision that prompted oil pricesto extend earlier sharp losses.
Oil, which was already down over 4% on U.S. President DonaldTrump's announcement of tariffs on trading partners, extended declines afterOPEC updated its plans in a statement, with Brent crude dropping over 6% tobelow $70 a barrel.
Eight members of OPEC+, which includes the Organization ofthe Petroleum Exporting Countries and allies led by Russia, had been scheduledto raise output by 135,000 barrels per day in May as part of a plan togradually unwind their most recent layer of output cuts.
But after a meeting of the eight countries held online onThursday, the group announced it would boost output by 411,000 bpd in May. OPECcited "continuing healthy market fundamentals and the positive marketoutlook."
"This comprises the increment originally planned forMay in addition to two monthly increments," OPEC said in a statementreferring to the volume. "The gradual increases may be paused or reversedsubject to evolving market conditions."
The increase will reduce fears arising from any disruptionto Iranain supply as Trump restores maximum pressure on Tehran, also an OPECmember. The U.S. President, who has called on OPEC to lower prices sincestarting his second term, may visit Saudi Arabia as soon as next month.
The May hike is the next increment of a plan agreed byRussia, Saudi Arabia, UAE, Kuwait, Iraq, Algeria, Kazakhstan and Oman togradually unwind their most recent output cut of 2.2 million bpd, which cameinto effect this month.
OPEC+ also has 3.65 million bpd of other output cuts inplace until the end of next year to support the market. The total of 5.85million bpd is equal to about 5.7% of global supply.
FOCUS ON COMPLIANCE
The decision on Thursday partly reflects OPEC+ leaders' wishto improve compliance with production quotas, analysts said.
"OPEC+ focus is on compliance and this decision forcesthe laggards to step up compliance," said Amrita Sen, co-founder of EnergyAspects.
Record output in Kazakhstan has angered several othermembers of the group, including top producer Saudi Arabia, sources have toldReuters. OPEC+ is urging the Central Asian country, among other members, tomake further cuts to compensate for excess production.
Kazakhstan has been producing oil well above the targetsagreed with OPEC+ in recent months. OPEC data also shows some other OPEC+nations such as the United Arab Emirates, Nigeria and Gabon pumping above theirquotas, but by far smaller amounts.
Production in Kazakhstan could drop this month and exportscould decline after Russia ordered to shut some export capacity on the CPCpipeline, the main evacuation route for oil in Kazakhstan produced by oilmajors such as U.S. Chevron and Exxon Mobil.
The eight OPEC+ countries will meet on May 5 to decide onJune output, OPEC's statement said.
(REUTERS)