OPEC+ has agreed to accelerate oil production hikes for the second consecutive month, increasing output in June by 411,000 barrels per day. This decision was made despite falling oil prices and expectations of weaker demand. The producer group stated that the fundamentals of the oil market were healthy and inventories were low after an online meeting.

Oil prices had previously fallen to a four-year low in April, dropping below $60 per barrel, following OPEC+'s announcement of a larger-than-expected production boost for May. Concerns about global economic weakness, exacerbated by U.S. President Donald Trump's tariffs, also contributed to the price decline.

Sources within OPEC+ have indicated that Saudi Arabia is advocating for the accelerated unwinding of earlier output cuts as a means to penalize Iraq and Kazakhstan for their non-compliance with production quotas. These increases also align with calls from President Trump for OPEC+ to raise output. Trump is scheduled to visit Saudi Arabia later in May.

In December, eight OPEC+ countries, responsible for implementing the most recent output cut of 2.2 million bpd, agreed to gradually phase it out through monthly increases of approximately 138,000 bpd starting in April 2025. The June increase will bring the total combined hike for April, May, and June to 960,000 bpd, which represents a 44% unwinding of the 2.2 million bpd cut, according to Reuters calculations.

Brent crude futures experienced a decline of more than 1% on Friday, settling at $61.29 a barrel, as traders anticipated increased oil supply from OPEC+. UBS analyst Giovanni Staunovo predicts that oil prices will fall on Monday due to the OPEC+ announcement, coupled with ongoing trade tensions and concerns about economic growth. He characterized the move as a 'managed' unwind of cuts rather than a fight for market share.

Reuters reported that Saudi Arabia, the de facto leader of OPEC+, has communicated to allies and industry officials its unwillingness to support oil markets with further supply cuts.

Helima Croft of RBC Capital Markets noted that compliance remains a key focus, with Kazakhstan and Iraq continuing to miss their compensation targets, along with Russia to a lesser extent. Kazakhstan defied OPEC+ this month when its energy minister stated that national interests would take precedence over those of the OPEC+ group when determining oil production levels. Kazakhstan's April oil output exceeded its OPEC+ quota despite a 3% fall.

OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, is currently cutting output by almost 5 million bpd, with many of these cuts scheduled to remain in effect until the end of 2026. The group is planning to hold a full ministerial meeting on May 28.