In an unexpected meeting, the Saudi Arabia-led Organization of Petroleum Exporting Countries (OPEC) announced on Saturday it would increase its production quota. This marks the third consecutive monthly rise, signaling a shift toward a price-war stance in the global oil market.
U.S. oil stocks showed a modest reaction, with Chevron, Exxon Mobil, Occidental Petroleum, and APA being among the key movers. Meanwhile, tanker fleet operators such as Teekay Tankers and International Seaways saw their stocks rise.
On Monday, U.S. crude oil futures fell by 2.2%, settling at $57.04 per barrel, a four-year low. Brent crude dropped 1.7% to $60.23 per barrel.
Originally scheduled for Monday, the OPEC meeting was rescheduled on short notice to Saturday, according to Bloomberg. During the meeting, OPEC agreed to increase production by 411,000 barrels per day starting in June. This increase brings the total rise in production for April, May, and June to 960,000 barrels per day, reversing 44% of the 2.2 million barrels per day production cuts made during the pandemic to stabilize oil prices.
The increase is partially aimed at pressuring Iraq and Kazakhstan, both of which have reportedly exceeded their production caps. By doing so, these countries have gained a larger share of the oil market’s revenue.
The decision also reflects a challenge to U.S. oil dominance. The U.S. set a record for oil production in October 2022, hitting 13.45 million barrels per day, but has since seen production hover just below that level. Producers are now discussing a potential peak in the Permian Basin, the largest production region in the U.S.
OPEC’s decision comes amid ongoing U.S.-Iran tensions and negotiations, adding leverage to ongoing discussions, particularly in relation to Chinese oil purchases from Iran. The timing of the announcement also indicates that the White House will likely focus more on Middle East affairs in the coming weeks. U.S. Defense Secretary Pete Hegseth is set to visit Israel on May 12, while President Trump is expected to visit Saudi Arabia on May 13.
Meanwhile, the stock market reacted unevenly. Energy stocks, including Occidental Petroleum and APA Corp., saw significant losses, with Occidental dropping 4.4% and APA falling 5.8%. ConocoPhillips also lost 4.2%. Other energy stocks, such as Diamondback Energy and EOG Resources, fell by around 2%.
On the other hand, tanker fleet operators, including Teekay, International Seaways, and Frontline, saw gains. Teekay rose 4.7%, International Seaways added 5.4%, and Frontline increased by 3.9%.
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