Oil Daily | OPEC's Production Hike and US Tariffs Trigger GCC Stock Drop, Oil Prices Fall 7%

【Global Oil Supply and Demand】

Goldman Sachs revised oil price forecasts citing OPEC's decision to increase production. Brent crude is expected to average $69 per barrel in 2025 and WTI at $66. In 2026, Brent is projected at $62, and WTI at $59, highlighting recession risks and potential increased OPEC supply.

Oil market fundamentals support OPEC's decision to increase May's crude oil production significantly more than planned, driven by low inventories and decreased US shale production. Despite bullish sentiment, OPEC's timing was criticized due to concurrent tariff announcements affecting oil prices.

Gulf Cooperation Council nations' stock markets plunged following US President Trump's tariffs announcement and OPEC's decision to raise production, with oil prices dropping 7%. Lower oil prices and OPEC cuts have impacted GCC finances, and a global equity sell-off adds further strain.

【Oil-Producing Countries Dynamics】

OPEC announced an unexpected production increase of 411,000 bpd in May, tripling the anticipated amount. The decision is part of a plan to unwind 2.2 million bpd in cuts since the start of the month. OPEC maintains flexibility to adjust plans based on market conditions.

【Industry News】

Brookfield Infrastructure Partners announced the acquisition of Colonial Pipeline for $9 billion, including debt. Shell is selling its stake for $1.45 billion, reflecting a focus on performance and competitive advantage. Colonial Pipeline is a major US oil product transportation asset spanning 5,500 miles.

The US Department of Energy awarded a $1.4 billion contract to Strategic Storage Partners to manage the Strategic Petroleum Reserve. The reserve, crucial for US energy security, will be maintained by the new contractor after a transition period, replacing Fluor Federal Petroleum Operations.

【Company News】

ExxonMobil anticipates higher Q1 earnings, up to $2 billion more than Q4, driven by higher oil and gas prices and refining margins. Upstream segment earnings could increase by $900 million due to these factors. Final results will be reported on May 2, 2025.

【Others】

Russia accused Ukraine of "provocative" attacks on energy infrastructure, risking the suspension of a ceasefire agreement. The US-brokered talks have stalled, with potential US sanctions on Russian oil if negotiations fail. Tensions between the two countries remain high amid stalled peace talks.

Japan's Mitsubishi Corporation is considering investing in the $44-billion Alaska LNG project, contingent on due diligence. The project, supported by the US, aims to export LNG to Asian allies. Alaska LNG is seen as key to reducing America's trade deficit and strengthening energy ties with Japan.