OPEC surprised markets this week with an unexpected drop in oil production. According to a Bloomberg survey published Thursday, the cartel’s output in April fell by 200,000 barrels per day (bpd), reaching 27.24 million bpd. This decline comes despite previous plans to increase production.
Venezuela accounted for half the decrease, as Chevron and other producers began reducing operations in anticipation of renewed U.S. sanctions. But the more puzzling move came from the United Arab Emirates (UAE) and Saudi Arabia, two members who had permission to increase output but chose not to.
The UAE, despite receiving a special allowance to boost production, actually cut output by 80,000 bpd. Saudi Arabia increased production by just 20,000 bpd—well below its adjusted target. Meanwhile, both Iraq and the UAE remain above their assigned quotas, making them the worst offenders in terms of overproduction.
These actions come as OPEC+ faces a credibility test. The group recently committed to correcting a 4.57 million bpd overproduction surplus by June 2026, largely through cuts planned for this year. Simultaneously, they tripled May’s planned output increase to 411,000 bpd—a move believed to be led by Saudi Arabia to pressure members who have consistently overproduced.
Adding to the uncertainty, Brent crude prices briefly dropped below $60 per barrel, far beneath Saudi Arabia’s fiscal breakeven price of $90. Reuters, citing anonymous sources, reported that Saudi officials have told allies they are prepared to tolerate lower oil prices and no longer plan to prop up the market. But the production cut casts doubt on that claim.
For now, OPEC+ has not committed to any specific course of action, according to sources close to the group. All eyes are on the upcoming OPEC+ meeting on Monday, where officials are expected to discuss potential future supply hikes.
Whether this signals a coordinated adjustment or the start of a quiet price war remains unclear. In response to speculation about Saudi Arabia’s strategy, Argus Media quoted a cryptic reply from the Kingdom: “Phantoms are being briefed by phantom briefers.”
Related Topics:
- Traders Eager to Reenter Russian Crude Market, But the Door Remains Closed
- Oil Prices Rise Due to Venezuela Tariffs
- Iraq Gives BP Final Approval for Kirkuk Oil Development