Trump may have swayed OPEC move, analysts say
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President Trump's prints could be on OPEC+'s decision Monday to start adding barrels next month after repeatedly delaying production hikes.
Why it matters: Oil prices fell to 2025 lows after OPEC+ said eight members would slowly start unwinding 2.2 million barrels per day of voluntary curbs.
- The OPEC+ move comes even though global demand growth remains tepid. Trump's tariffs — which are adding downward pressure on prices — could lower it more.
The intrigue: Trump has called for Saudi Arabia — which leads OPEC+ with Russia — and OPEC more broadly to lower prices.
- Monday's decision "does not seem to be in response to stronger-than-expected demand for their barrels, but rather in response to increasing political pressure, especially from the Trump administration," Barclays analyst Amarpreet Singh said in a note.
What they're saying: RBC Capital Markets analysts thought OPEC+ might wait until later in the year.
- But the rather small increase in April (roughly 140,000 daily barrels) combined with Trump's pressure may have tipped the balance, RBC's Helima Croft writes in a note.
"Russia would seem to be especially incentivized to appear supportive of an incremental increase, given the looming prospect of US sanctions relief," she writes.
- ClearView Energy Partners is somewhat skeptical about Trump's effect. But the firm said OPEC+ may have seen "potentially challenging optics" in a fourth delay, "especially in the wake of Trump's request."
Catch up quick: On Monday, OPEC+ argued there are "healthy market fundamentals" and a "positive market outlook."
- It will be "adaptable to evolving conditions" and could pause or reverse additions.
State of play: U.S. Energy Secretary Chris Wright, in a statement after the OPEC+ move, said Trump is lowering costs by "unleashing affordable, abundant, and reliable American energy."
- But the U.S. "welcomes energy producers around the world aligning themselves with this administration's efforts to lower costs with increased energy production," he said.
Yes, but: Market watchers don't see U.S. oil production growing rapidly from already record levels anytime soon, especially if prices drop.
What we're watching: Lots of market crosscurrents affecting prices — new tariffs, the Russia-Ukraine trajectory, U.S. efforts to curb Iran's oil exports, and more.
