Oil prices slumped on Monday, May 5, 2025, after OPEC+ countries announced a sharp production increase.
OPEC+ countries announced the increase despite oversupply concerns and growing fears that United States President Donald Trump’s trade war could weaken demand.
Saudi Arabia, Russia, and six other members of the oil cartel announced over the weekend an output increase of 411,000 barrels a day for June, a month after a similar move had already caused prices to fall.
The price of crude has also been sliding because of fears of a global economic slowdown on the back of Trump’s tariff onslaught.
The OPEC+ move “confirms a stark turnaround away from the production cuts that have persisted since 2022”, said a Deutsche Bank research note.
Oil prices fell almost four percent before paring back some losses.
Brent, the international benchmark, was trading at just under $60 per barrel at about 0715 GMT.
Some analysts pointed to pressure from Trump to lower prices and expectations of declining Iranian oil exports amid tighter sanctions, as possible reasons for the unexpected move.
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Others said the motivation was unclear.
A senior analyst at Swissquote Bank, Ipek Ozkardeskaya, said: “The weekend news wasn’t a shocker but the reasons behind the move remain uncertain.
“The official communication says the group is bringing barrels back to the market because ‘fundamentals are healthy and inventories are low’.
“Yet global growth expectations have been crumbling due to a heated trade war between the United States and the rest of the world, and rising output only worsens oversupply concerns. So the real reason must be something else.”
She said some argued that the Saudis were “punishing” OPEC members who had not complied fully with the previous policy of cutting production.
Other theories include that Trump wants to lower oil prices to hurt Russian finances and speed up the end of the Ukraine war, or that Saudi Arabia wants to push out United States shale businesses and increase its market share, AFP reported.
“We don’t know for sure. The exact motive remains unclear,” Ozkardeskaya said.
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