Market players feel latest OPEC+ move could impact prices of crude oil
| Photo Credit:
Eli Hartman
Crude oil futures traded below $60 a barrel on Monday morning after the Organisation of the Petroleum Exporting Countries and allies, known as OPEC+, decided to increase production output, signalling surplus supplies in the coming months.
At 9.57 am on Monday, July Brent oil futures were at $59.07, down by 3.62 per cent, and June crude oil futures on WTI (West Texas Intermediate) were at $55.98, down by 3.96 per cent. May crude oil futures were trading at ₹4,734 on Multi Commodity Exchange (MCX) during the initial hour of trading on Monday against the previous close of ₹4,940, down by 4.17 per cent, and June futures were trading at ₹4,735 against the previous close of ₹4,928, down by 3.92 per cent.
A statement by the OPEC+ said that the eight OPEC+ countries (Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman), which previously announced additional voluntary adjustments in April and November 2023, met virtually on May 3 to review global market conditions and outlook.
“In view of the current healthy market fundamentals, as reflected in the low oil inventories, and in accordance with the decision agreed upon on December 5, 2024, to start a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from April 1, 2025, the eight participating countries will implement a production adjustment of 4,11,000 barrels per day in June 2025 from May 2025 required production level,” it said.
The gradual increases may be paused or reversed subject to evolving market conditions. This flexibility will allow the group to continue to support oil market stability. The eight OPEC+ countries also noted that this measure will provide an opportunity for the participating countries to accelerate their compensation.
The eight OPEC+ countries will hold monthly meetings to review market conditions, conformity, and compensation. These countries will meet on June 1 to decide on July production levels.
The latest move by the OPEC+ will increase supplies in the global markets in the coming months. Market players feel that this could impact the prices of crude oil.
The move by the OPEC+ to increase the production output overshadowed the situations arising out of tensions in West Asia. According to reports, a missile fired by the Houthis landed near Ben Gurion airport in Israel on Sunday.
In a post on the social media platform X, the Israeli Prime Minister Benjamin Netanyahu, said: “Attacks by the Houthis emanate from Iran. Israel will respond to the Houthi attack against our main airport AND, at a time and place of our choosing, to their Iranian terror masters.” Reacting to this, the Iranian Defence Minister Aziz Nasirzadeh said that his country would strike back if the US or Israel attacked.
May natural gas futures were trading at ₹310.90 on MCX during the initial hour of trading on Monday against the previous close of ₹306.60, up by 1.40 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), May turmeric (farmer polished) contracts were trading at ₹14,126 in the initial hour of trading on Monday against the previous close of ₹14,352, down by 1.57 per cent.
May guargum futures were trading at ₹9,331 on NCDEX in the initial hour of trading on Monday against the previous close of ₹9,417, down by 0.91 per cent.
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Published on May 5, 2025
