Oil Prices Tumble After OPEC+ Agrees to Boost Output Under Pressure from Trump

March 4, 2025 William Johnson Asia Pacific, Business 0

Brent Crude Drops as OPEC+ Announces Production Increase

Oil prices have tumbled after OPEC+ agreed to boost output under pressure from Donald Trump. Brent crude dropped as much as 2.8% on Monday to $71.17 a barrel after the oil cartel, led by Saudi Arabia and Russia, unexpectedly said it would increase production from April, initially by 138,000 barrels a day.

OPEC+ Plans to Increase Output After Two-Year Delay

A plan to increase output had been delayed by more than two years, but OPEC+ said it would now stage increases in output, hitting an extra 2.2 million barrels a day by 2026. In a statement, the group said: “This gradual increase may be paused or reversed subject to market conditions,” adding: “This flexibility will allow the group to continue to support oil market stability”.

Trump’s Influence on OPEC+ Decision

The announcement comes weeks after President Trump expressed surprise that the oil cartel had not cut prices. Last month, he used a speech at the World Economic Forum to urge Saudi Arabia and other members to “bring down the cost of oil,” linking it to the war in Ukraine. Trump stated, “Right now the price is high enough that that war will continue. You gotta bring down the oil price. That will end that war. You could end that war”.

Goldman Sachs’ Brent Crude Price Forecast

Despite the recent developments, Goldman Sachs still sees Brent crude trading between $70 and $85 per barrel. The investment bank’s forecast reflects a cautious outlook on global oil supply and demand dynamics, reports MSN.

Trump’s Commitment to Boost US Oil and Gas Production

Mr. Trump has vowed to ramp up the US’s oil and gas production to make the US a “manufacturing nation once again”. He has promised to exploit America’s oil reserves, boasting that the US has “the largest amount of oil and gas of any country on earth… and we are going to use it. We’ll use it. We will bring prices down, fill our strategic reserves up again right to the top, and export American energy all over the world”.

Economists Question Trump’s Oil Policies

However, economists have suggested that Trump’s policies on oil are contradictory, with lower oil prices undermining his attempt to encourage production at home. David Oxley, at Capital Economics, has said: “Lower oil prices will certainly not incentivise US oil producers to ‘drill, baby, drill’ – particularly in high-cost Alaska”.

Impact on Petrol Prices

While Monday’s price drop was sharp, it takes oil back only to where it was trading in December. As a result, it is unlikely to lead to significant declines in petrol prices at the pump.

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Demystifying the world of finance is my mission. As a finance news writer with 7 years of experience, I've covered everything from breaking market news to in-depth analysis of industry trends. I'm here to keep you informed and empowered in your financial journey.