OPEC+ decides to hike oil production for the first time in 2 years

Vienna: OPEC+ will proceed with plans to revive halted oil production after repeated delays, amid pressure from President Donald Trump to lower oil prices.

In a surprise move, the group led by Saudi Arabia and Russia will go ahead with the increase of 138,000 barrels a day in April, delegates said. It will be the first in a series of monthly hikes to revive production halted for more than two years, which will gradually restore a total of 2.2 million barrels a day by 2026, delegates said.

Crude traders had widely expected that OPEC+ would once again delay the restart, which it had postponed three times since first announcing a supply roadmap last June. Oil prices are too low for the Saudis and many other members to government spending, and global markets are on track for a supply surplus later this year.

Brent crude, the international benchmark, dropped 2.1% to $71.63 a barrel.

The group's choice may be yet another illustration of the sway of Trump, who last month called on OPEC to ‘cut the price of oil’. The Saudi Crown Prince Mohammed bin Salman has pledged to invest $600 billion in the US in a bid to strengthen the kingdom's ties with Washington.

There are other reasons why the coalition may have opted to green-light the increase.

Co-leader Russia, hit by fresh sanctions in the final days of Joe Biden's administration, may have more favorable conditions to ship barrels thanks to warmer relations with Trump. And Washington's ‘maximum pressure’ on Iranian exports could create a gap for other OPEC+ nations to fill.