Crude oil prices took a sharp hit, dropping by 6%, as global energy markets reacted to two major developments: an unexpected increase in oil production by OPEC and its allies, and U.S. President Donald Trump’s fresh round of reciprocal tariffs.
On Thursday, oil futures slid significantly after the Organization of the Petroleum Exporting Countries (OPEC) and its partners unveiled a production increase that far exceeded market forecasts. This announcement coincided with the market’s response to Trump’s tariff measures, sending prices into a downward spiral.
Brent crude dropped 6.42% to $70.14 a barrel, while West Texas Intermediate (WTI) shed 6.64% to settle at $66.95. The downward momentum continued into Friday’s Asian trading, pushing both benchmarks toward levels not seen since December 2021.
The production decision came shortly after Trump’s “Liberation Day” proclamation, in which he revealed a new wave of tariffs. Investors worried these policies could escalate into a global trade war, dragging down economic growth and demand for key commodities like oil and copper. Oil prices had already fallen 4% following the tariff announcement.
The supply increase, agreed upon by eight OPEC members, further fueled market anxiety. While energy products were excluded from the new U.S. tariffs, the broader economic implications weighed heavily on sentiment. The participating countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—committed to adding 411,000 barrels per day to the market in May.
“This comprises the increment originally planned for May in addition to two monthly increments,” stated OPEC’s official website.
This rise significantly outpaced expectations, which had projected a 140,000-barrel-per-day increase. It follows a planned April boost of 135,000 barrels per day, marking a continued rollback of the group’s earlier output curbs totaling 2.2 million barrels daily.
“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 organisation added.
“The eight OPEC+ countries also noted that this measure will provide an opportunity for the participating countries to accelerate their compensation.”
Some nations have exceeded their output targets in recent months, and this adjustment aims to balance the discrepancy. Kazakhstan, the United Arab Emirates, Nigeria, and Gabon were named as countries that had overproduced.
The group is set to meet again on May 5 to decide on production levels for June. However, tensions tied to U.S. tariffs could complicate supply projections. Trump’s recent actions include a 25% tariff on countries importing Venezuelan oil and threats of steep levies—ranging from 25% to 50%—on Russian oil buyers. He also alluded to “bombing” and “secondary tariffs” aimed at Iran, further unsettling global markets.
These “secondary tariffs” would function as sanctions via import duties, potentially affecting major purchasers of Iranian and Venezuelan oil like China and India.
Reduced exports from Iran and Venezuela could have a noticeable impact. Iran’s production, as reported by the U.S. Energy Information Administration (EIA), stands at 1.5 million barrels per day—1.4% of global supply. Meanwhile, OPEC data showed Venezuela’s output reached 900,000 barrels per day in Q1 2025, with January exports to the U.S. accounting for 250,000 barrels daily. Reuters noted an 11.5% drop in Venezuela’s exports in March due to new U.S. sanctions.
