Oil prices plummet as Saudis lead supply drive
Oil prices are falling to their lowest close since 2021 as eight countries including Saudi Arabia and Russia surprised market leaders by announcing an increase to production.
The shock decision by the OPEC+ alliance, delivered via a video conference on Thursday, came less than 24 hours after President Trump’s Liberation Day tariff announcements intensified global trade war tensions.
Brent crude oil futures fell by five per cent on Friday morning as benchmark oil prices while the US West Texas Intermediate (WTI) benchmark dipped by roughly the same level.
The mass selloff has prompted Goldman Sachs analysts to radically reduce their benchmark targets for Brent and WTI by over six per cent for 2026.
The other countries part of the OPEC+ alliance include oil producers Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman.
The announcement sees oil production increase by three times the planned amount in May as producers hope to drive down prices in response to excess production from members Iraq and Kazakhstan.
‘Trump wants lower oil prices’
Crude oil prices had already taken a hit from Trump’s announcement but OPEC+ may have seen an opportunity after his Rose Garden speech, according to ING’s head of commodities strategy Warren Patterson.
“US President Trump is taking a more hawkish view towards Iran and Venezuela with stricter sanctions. OPEC+ might feel that this provides it with the opportunity to increase supply,” he said.
“OPEC+ might see this as an opportunity to boost supply, especially after Trump announced secondary tariffs for buyers of Venezuelan oil and threatened similar measures for buyers of Iranian and, potentially, Russian oil.”
“It is no secret that Trump wants lower oil prices and has pressured the Saudis to boost supply,” he added.
Trump made tariff exemptions to imports of oil, gas and refined products but economists fear his policies’ impacts on global economic growth and inflation could weigh down on prices.
Patterson also indicated that markets were taken aback by the move.
“This is strange given that, if anything, there is more uncertainty for the market, particularly when it comes to demand after the US tariff announcement.”
“Current price levels mean it is unlikely that Trump is going to be successful in boosting domestic oil production. US oil producers are price sensitive,” he added.
Mukesh Sahdev of Rystad Energy suggested that prices could soon rebound.
“With potential supply disruptions stemming from sanctions and tariffs – on both sellers and buyers – oil prices are unlikely to stay below $70 for long,” he said.
The next meeting by OPEC+ members will come on 5 May.