OPEC+ Agrees Another Supply Surge in June to Deepen Oil Rout

[BumRushDaShow]

Source: Bloomberg

May 3, 2025 at 5:13 AM EDT
Updated on May 3, 2025 at 7:48 AM EDT


OPEC+ agreed to surge output again in June, as the group’s leaders continue an accelerated revival of supply aimed at punishing over-producing members that has sent crude prices plunging. Key nations led by Saudi Arabia and Russia agreed to add 411,000 barrels a day next month, according to a statement on OPEC’s website following a video conference on Saturday. The hike mirrors a similar increase announced last month, when the group made the shock decision to bring back triple the planned volume for May.

Crude traders had already been bracing for a large increase after Saudi Arabia signaled in recent weeks that it was willing to accept a prolonged period of low oil prices. But it builds on a dramatic reversal in recent months from the cartel’s longstanding position of defending oil prices, raising questions about the future of the alliance and spurring speculation about a price war.

While the statement cited “current healthy market fundamentals,” OPEC+ delegates have attributed the strategy shift to Saudi frustration with overproduction by members like Kazakhstan and Iraq, and have chosen to discipline them through the financial “sweating” of a price slump.

“OPEC+ has just thrown a bombshell to the oil market,” said Jorge Leon, an analyst at Rystad Energy A/S, who previously worked at the OPEC secretariat. “With this move Saudi Arabia is seeking to punish lack of compliance particularly from Kazakhstan but also ingratiate with President Trump’s push for lower oil prices.”

Read more: https://www.bloomberg.com/news/articles/2025-05-03/opec-agrees-another-oil-supply-surge-for-june-delegates-say

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What is missing out of all of this is that the "drill baby drill" crowd will suddenly find out that the price/bbl will not be enough for their "breakeven" cost for any new drilling/fracking, let alone turn a profit on those wells for some time.



(above and below from here - https://mercercapital.com/2025-u-s-oil-outlook/)

Most U.S. firms surveyed recently are not planning on increasing their investments for 2025, even after now knowing who will be in the White House for the next four years. In fact, industry consultant Wood Mackenzie just released a report on 2025 guidance for upstream companies capital budgets. They estimate 2025 corporate capital budgets to be down by 1.8% compared to 2024. These are not indicators of an industry that is “chomping at the drill bit” right now. One reason is that breakeven prices to drill new wells ranged from $59 – 70 as an industry average in 2024 according to the Dallas Fed Survey suggesting a mediocre economic prospect.

The above came out in January, before the tariffs fiasco and the latest OPEC+ decision.

Spot Price of oil (WTI) as of 5/2/25 at the close -

[Callie1979]

1. Low oil will hurt Russia's war effort. Isnt $60 the lowest they can handle?

Not to mention many of OUR wells.

[littlemissmartypants]

14. I read somewhere that $100/barrel is the target. ...

I don't recall any mention of a ceiling or floor but suspect anything closer to $50 isn't good.

❤️

[Callie1979]

16. Well, we haven't seen $100 a barrel in quite a long time.

Even with the Saudi cutbacks a couple years ago (to help trump IMO)

[littlemissmartypants]

18. So, then they're missing their target. Oops for them. ❤️

[Callie1979]

19. Now russia is importing North Korean slaves to work

Trump is helping Putin hang on.

[not fooled]

2. Another of red don's goals

blows up in his stupid face.

What is missing out of all of this is that the "drill baby drill" crowd will suddenly find out that the price/bbl will not be enough for their "breakeven" cost for any new drilling/fracking, let alone turn a profit on those wells for some time.

[JMCKUSICK]

3. Why is gas just as expensive

as when oil was $95 a barrel? That was never the case 30 years ago.

[BumRushDaShow]

5. Lack of refineries

And the local retailers are always the first to raise the prices but last to lower them.

[Inkey]

4. At $60 Bbl shouldn't gas prices

Be lower, like $2.00 a gallon ?

[BumRushDaShow]

6. Need more refineries to increase that supply

PLUS many areas of the country are about to switch to the more expensive "summer blend" gas (with special additives).

[Inkey]

7. Nah,

I have been watching these prices for
years. There should not be these prices
per gallon that we are seeing.

[IbogaProject]

8. That will hurt American producers

I think our costs are higher and a lot of our supplies aren't profitable below $60 per barrel.

[BidenRocks]

9. Two refineries are closing in Los Angeles

One this year.
Any contingency plans?
All the supply is useless if you can't refine it.

[Envirogal]

10. Ironic Los Angeles prices are always so high

Despite having refineries here.

[24601]

11. Another component of gasoline and diesel prices is manufacturing the specific blends that are mandated by federal

regulations and vary based on the geographic point of sale. The additive component of fuel prices are highest in the spring and summer.

From the EPA, here is the registered list of additives. https://www3.epa.gov/otaq/fuels1/ffars/web-gas.htm The list is several hundred pages.

[PortTack]

12. This will not lower gas prices, but it will put small drilling companies here in the US out of business

[BumRushDaShow]

13. Yup

It's a fracker nightmare. It happened before and much of the ND fracking industry had nearly shut down... at least temporarily. They are right near breakeven now...

[Cheezoholic]

15. I'm all for defracking lol n/t

[howardmappel]

17. Effect on Russia

These two folks do an excellent job of watching Russia's finances (along with other things) and how the price of oil may affect it:

Let me remind you of the history
The war with the Russians began in February 2014 — Brent was worth 0.

Minsk-2 was signed a year later, in February 2015 — Brent was worth .

The Russians no longer had time for war, because by the end of 2015 Brent had fallen to .
1/

— Evgen Istrebin 🇺🇦 (@evgen-istrebin.bsky.social) 2025-05-03T17:50:15.890Z

https://bsky.app/profile/prune602.bsky.social (he hasn't posted yet on the OPEC+ report, I expect he will by tomorrow).

I read these gentlemen basically every day.