Brent Oil Futures dropped approximately $10 a barrel since Thursday.
The implementation of new tariffs and a surprise OPEC+ supply increase have negatively impacted the market.
Oil prices sank dramatically as a new barrage of tariffs fueled fears of a global economic downturn, adversely impacting oil demand.
Brent crude also reported its most significant sell-off since August last year, losing over 10% in less than two days, posting its worst daily decline since 2022.
OPEC is likely aware of the risks from demand destruction, and its decision to increase production will have a minimal impact on oil prices in the short term.
Markets suggest that the group either penalizes noncompliant members for overproduction or anticipates significant losses from sanctions that countries like Iran and Venezuela face in the short term.
U.S. President Donald Trump’s imposed tariffs are also affecting oil prices. Crude oil prices will certainly not increase if demand remains low. This is a serious risk to the global economy.
Besides tariff concerns, OPEC’s sudden action on their agreement in May and increasing supply beyond expectations was unprecedented. The initial OPEC+ plan was to increase supply by 135,000 b/d in May.
The group is now set to increase supply by 411,000 b/d. OPEC+ cited strong fundamentals and a “positive market outlook.” However, tariff uncertainty still clouds the outlook for demand and prices.
American oil and gas stocks are experiencing a sharp decrease today after the announcement from OPEC+ members regarding plans to increase oil production starting in May, alongside U.S. President Donald Trump’s imposing tariffs. The S&P 500 Energy sector fell as much as 5.4%, the most during an intraday decline since March 2023.
Nigeria’s oil industry faces challenges, as the country’s exports are not in high demand, as evidenced by the mild unappealing loading of crude cargoes.
Furthermore, Nigeria LNG Ltd.’s gas lines have been damaged by criminals, restricting fuel shipments.
Goldman Sachs has lowered its 2025 oil price prediction by 5.5% for Brent crude and 4.3% for West Texas Intermediate, citing President Trump’s recent tariffs and OPEC+’s decision in May to boost production.
Goldman analysts noted in a report, “Given the growing risks of recession and, to a lesser extent, of increased OPEC+ supply, the risks to our reduced oil price forecast are tilted to the downside, particularly for 2026.”
To maintain prices above a certain acceptable minimum, OPEC+ nations, which have been reducing their oil production for over a year, have agreed to further ease the cuts by increasing their combined supply by 411,000 barrels per day starting in May. Traders and analysts had expected a much smaller increase of 135,000 barrels per day, making the move unexpected.