[RIYADH] Opec+ agreed to make a larger than expected oil supply hike in May, adding the equivalent of three monthly tranches from its previous plan to revive output.
The group led by Saudi Arabia and Russia will add 411,000 barrels a day to the market next month, according to a statement posted on the Opec website. The decision followed a conference call between ministers on Thursday that was focused on member countries that had been consistently exceeding their quotas, delegates said, asking not to be identified as the talks were private.
The surprise decision deepened a slump in crude prices that had been triggered by US President Donald Trump’s announcement of historic tariffs on Wednesday. Oil futures fell 5.5 per cent to US$70.80 a barrel as of 12.35 pm in London.
After several delays, the Organization of Petroleum Exporting Countries and its partners finally began this month restoring output that had been halted over the past few years. It will boost production by 138,000 barrels a day this month.
The acceleration of the group’s production increase in May is intended to put pressure on members that have been exceeding their quotas, while also providing them with the opportunity to make larger compensation cuts to atone for past cheating, delegates said.
While global oil markets are still fragile amid growing trade tensions, and many Opec+ members need higher crude prices to balance their state budgets, the group has also faced external pressure from Trump to “cut the price of oil.” BLOOMBERG
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