OPEC Expected to Make Final Decision on April Supply Increase in the Next Few Weeks

What Happened?

The Organization of Petroleum Exporting Countries, better known as OPEC, won’t delay a supply increase in April according to Russia’s Deputy Prime Minister Alexander Novak. 

The announcement was made on Russia’s state media this week. 

However, according to Bloomberg an anonymous OPEC delegate said there is still some disagreement within the group about how to proceed and no final decision has been made. 

A final decision from OPEC is expected to be made within the next few weeks. 

Why it Matters

U.S. President Donald Trump has called on OPEC to reduce oil prices, which a supply increase would likely help bring about. 

Last week OPEC secretariat said U.S. tariffs have “added more uncertainty into markets, which has the potential to create supply-demand and therefore generate more volatility.”

OPEC has cut output by 5.85 million barrels per day, equal to about 5.7% of global supply, which was agreed to in a series of steps since 2022. 

The anonymous delegate cited by Bloomberg reportedly said the current global oil market is too fragile to go ahead with the planned production increase. Another delegate cited but not identified by Yahoo Finance reportedly said they think the market can absorb an increase due to increased demand from China.

An analyst with financial service company Morgan Stanley said they expect the current level of oil production by OPEC to be extended again. If the 120,000 barrels per day increase isn’t implemented, it would be the fourth time since 2022 OPEC has delayed plans to revive production. 

OPEC currently plans to restore a total of 2.2 million barrels per day in monthly increments by late 2026.

OPEC countries have their own domestic problems to consider, and the current price of $74 a barrel is already too low for some of them to fund their governments. 

“Fundamentally, you can present a case for a supply return in April,” said Harry Tchilinguirian, head of oil research at Onyx Commodities Ltd. Mr. Tchilinguirian went on to say he believed that ultimately oil prices would determine OPEC’s decision. 

According to the International Energy Agency, even if OPEC doesn’t implement an increase in April, global supply will exceed demand by 450,000 barrels per day by the end of 2025. 

If OPEC goes ahead with the April increase, that imbalance is likely to increase even more.

How it Affects You

OPEC’s decisions can move markets, and they often use supply as a tool to manipulate global markets to their advantage. While the U.S. is currently the world’s leading oil producer, production is spread among many different companies.

While in OPEC, entities like Saudi Aramco concentrate their production power enough that they can move markets in a way individual U.S. producers can’t.