Oil prices have come under increased pressure following a sweeping tariff announcement from U.S. President Donald Trump that rattled global markets. Companies and investors are growing increasingly anxious about an escalating trade war and a broader economic slowdown.
Goldman Sachs on Thursday revised down its December 2025 forecasts for both major oil benchmarks—Brent and WTI—by $5 each, to $66 and $62 per barrel, respectively. The bank cited the materialization of two key downside risks it had previously flagged: rising tariffs and elevated OPEC+ supply levels.
The bank also trimmed its oil price forecasts for 2025 and 2026, stating that "given elevated recession risks and heightened price volatility, we no longer see a stable price range as viable." Analysts at S&P Global Market Intelligence warned that, in a worst-case scenario, global oil demand growth could shrink by as much as 500,000 barrels per day.
JPMorgan has now raised the probability of a global recession this year from 40% to 60%.
So when OPEC, which accounts for roughly 40% of global crude output, not only moved ahead with its previously announced production hike in coordination with non-OPEC allies—but also tripled the expected volume—the market was caught off guard.
On Thursday, eight key OPEC+ producers agreed to raise oil output by 411,000 barrels per day, accelerating the planned increase and sending oil prices tumbling by 6%. The group—comprising Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman—had been widely expected to implement a much smaller hike of under 140,000 barrels per day.
OPEC+ Optimism and the Trump Factor
Several dynamics appear to be behind the production alliance's decision. One is the group's optimism about oil demand in the latter half of the year—an increasingly contrarian view as investor sentiment sours and fears of a global downturn mount.
In a joint statement on Thursday, the eight OPEC+ nations involved in the decision said: "Market fundamentals remain sound and outlooks positive. This move allows participating countries an opportunity to accelerate compensation efforts."
They added that "the phased increase could be paused or reversed depending on evolving market conditions."
Another factor may well be the “other T-word” in the White House—Donald Trump—who has loudly urged oil producers to pump more crude in order to ease price pressures on American consumers, both during and between his presidential terms.
"This is, in part, a gesture to appease Trump," said Saul Kavonic, head of energy research at MST Marquee, in an interview with CNBC’s Dan Murphy on Friday. "Trump is likely to pressure OPEC to lower oil prices to counteract the inflationary effects of tariffs."
OPEC officials, however, have denied that the move was made with Trump in mind.
Compliance Challenges and Market Share
Another persistent issue for OPEC+ is compliance—some countries are producing well above their quotas, complicating efforts to control market supply. According to Helima Croft, head of global commodity strategy and MENA research at RBC Capital Markets, the production boost may be a way to enforce discipline.
In a note published Thursday, Croft wrote, "We believe the decision reflects the leadership's intent to send a warning to Kazakhstan, Iraq, and even Russia over continued overproduction." She referenced the March 2020 oil price war, when Saudi Arabia flooded the market to punish Moscow for initially refusing to cut output—causing Brent prices to plunge to around $15 per barrel.
Kavonic added that the production hike is also “a clear bid by OPEC to regain market share”—likely at the expense of U.S. shale producers, who are unlikely to welcome the move.
What’s Next?
Nader Itayim, managing editor at Argus Media, said, "OPEC+ appears confident that markets will rebalance in the coming months, based on assumptions of rising summer demand and a resolution to the tariff standoff."
He added that most producers would be satisfied with a Brent price in the $70–$75 range.
What happens next will depend heavily on the trajectory of tariffs and any escalation in the trade war. While analysts note that if prices fall toward $60, OPEC+ may be forced to pause—or even reverse—the production hike, this could face resistance from countries like Iraq and Kazakhstan, which have long sought to boost output to increase revenues.
Still, Itayim emphasized that the group retains flexibility to adjust plans on a monthly basis.
“If things don’t play out as expected, all it really takes is a phone call,” he said.
[Compliance Note]
All posts by Sellsmart are for informational purposes only. Final investment decisions should be made with careful judgment and at the investor’s own risk.
The content of this post may be inaccurate, and any profits or losses resulting from trades are solely the responsibility of the investor.
Core16 may hold positions in the stocks mentioned in this post and may buy or sell them at any time.
