Oil just took another dive, and OPEC+ is in the driver’s seat this time.
On Monday, May 5, 2025, Brent crude fell by $1.54 (a 2.51% dip) to $59.75 a barrel, while West Texas Intermediate (WTI) dropped $1.64 (2.81%) to settle at $56.61.
If that sounds steep, it gets worse: Brent shed 8.3% in the previous week alone, and WTI lost 7.5%. Welcome to the latest twist in the global energy market, where politics, policy, and supply shocks are rewriting the rules.
It’s All About Supply
So, what’s behind this plunge in oil prices? It’s all about supply, and lots of it. OPEC+, the oil-producing supergroup of OPEC nations and allies like Russia, just agreed to ramp up output by 411,000 barrels per day in June.
That marks the second month in a row of accelerated hikes, bringing the total increase for April through June to 960,000 barrels per day. In other words, nearly half of the 2.2 million bpd cuts introduced since 2022 are being reversed fast.
Part Punishment and Part Power Play
The move, reportedly pushed by Saudi Arabia, is part punishment and part power play.
The Saudis are unhappy with fellow OPEC+ members like Iraq and Kazakhstan for exceeding their production quotas, and this rapid unwinding could be their way of enforcing discipline, while also pressuring U.S. shale producers who thrive on higher prices.
But it’s not just internal politics driving prices down. Global demand remains shaky, thanks to ongoing tariff tensions and recession fears.
Although some analysts had hoped U.S.-China trade talks might boost demand sentiment, the sudden flood of supply is overwhelming any optimism. Saxo Bank’s Ole Hansen says it bluntly: “The production increase is as much about challenging U.S. shale supply as it is to penalize members.”
Optimism is Sinking Too
If you’re a consumer, cheaper oil could mean lower fuel prices at the pump, eventually. For investors, however, this is a tricky terrain.
Energy stocks could face pressure, especially those heavily reliant on high crude prices.
On the flip side, companies with strong refining margins or exposure to alternative energy might be better positioned to ride out the turbulence.
The OPEC+ output surge may offer short-term relief for energy-hungry economies, but it’s stirring up fresh uncertainty in global oil markets.
Keep an eye on production compliance, U.S.-China trade developments, and global economic indicators, they’ll be key in determining whether this is just a dip or the start of a deeper downturn.
