OPEC+ Discusses 400,000-Barrel Production Hike Ahead of Call

An oil drum with featuring the logo of the Organization of the Petroleum Exporting Countries (OPEC) at the COP29 climate conference in Baku, Azerbaijan, on Wednesday, Nov. 13, 2024. The United Nations climate change conference, COP29, runs through Nov. 22. Photographer: Andrey Rudakov/Bloomberg via Getty Images Photo by Andrey Rudakov /Photographer: Andrey Rudakov/Blo

Article content

(Bloomberg) — Key OPEC+ nations are discussing making another production increase of roughly 400,000 barrels a day in June ahead of a video-conference to set policy on Saturday, delegates said.

Article content

Article content

The group led by Saudi Arabia and Russia stunned oil traders with a 411,000 barrel-a-day hike that was triple the amount originally planned for May, in an apparent bid to discipline its over-producing members. They’re considering doing the same again next month, said the delegates, who asked not to be identified as the talks are private.

Article content

Article content

Such a move would be in line with crude traders’ expectations. Despite a slump in prices, which crashed to a four-year low below $60 a barrel last month, laggards within the OPEC+ coalition like Kazakhstan have made little effort to mend their ways. 

Article content

Article content

The move would also probably be welcomed by President Donald Trump, who has called on the Organization of the Petroleum Exporting Countries to lower fuel costs, and plans to visit the Middle East this month. Trump celebrated falling gasoline prices in a social media post earlier on Friday. 

Article content

Brent futures extended losses after the talks were reported, falling 1.7% to $61.12 as of 6:10 p.m. in London trading. In the US, West Texas Intermediate contracts briefly dipped below $58.

Article content

Just a few hours ago, OPEC+ decided to bring forward its policy-setting conference call, which had originally been scheduled for Monday. A final decision on June output has yet to be made, and Saudi Energy Minister Abdulaziz bin Salman has built a reputation for last-minute surprises.

Article content

In recent days, Riyadh had signaled to oil industry figures that it has the capacity to withstand a prolonged market downturn, triggering speculation over what exactly it might unveil.

Article content

Article content

READ: Understanding the Saudi Push for Lower Oil Prices: Javier Blas

Article content

The kingdom’s policy pivot has been spurred by months of growing frustration with OPEC+ members like Kazakhstan, which continues to significantly flout its agreed limits despite repeated promises to conform. 

Article content

Astana may have little ability to atone even if it wanted to, as much of its production is operated by international companies with a priority to expand. But the country doesn’t even seem to have tried: Chevron Corp. chief executive Mike Wirth said on Friday that he didn’t discuss potential curtailments at its Tengiz development in Kazakhstan when he met with the country’s leaders recently, echoing similar comments from Eni SpA. 

Article content

The plunge in prices threatens oil firms including US shale producers, who have warned they’ll be unable to obey Trump’s call to “drill, baby, drill” toward a new era of American energy dominance. It also spells pain for members of OPEC+ including the Saudis themselves.

Article content

The kingdom has been already been forced to cut investment in projects at the heart of Crown Prince Mohammed bin Salman’s plans for economic transformation, such as the futuristic city, Neom. The outlook for Mideast nations was downgraded last week by the International Monetary Fund, which estimates that Riyadh needs oil prices above $90 to cover government spending.

Article content

—With assistance from Fiona MacDonald.

Article content

(Updates with Chevron comment in ninth paragraph.)

Article content