Oil prices experienced a sharp decline on Friday following two major developments: US President Donald Trump’s announcement of global tariffs and the Opec+ alliance’s decision to significantly boost crude oil production. The international benchmark, Brent crude, fell over 11 percent within two days, dropping from $74 per barrel to approximately $66 per barrel, marking its lowest levels since 2021.
This downturn reflects the secondary effects of Trump’s trade war on the Middle East. Gulf states, including Saudi Arabia, Kuwait, and the UAE, faced reduced demand for crude oil amid fears of a slowing global economy. Simultaneously, Opec+, led by Saudi Arabia and Russia, abandoned its strategy of restricting supply to support prices. Instead, it announced a tripling of the planned output increase for May during a routine call.
Saudi Arabia, which has primarily restricted oil supply to lift prices, made a dramatic reversal. This decision aims to penalize so-called ‘free riders’ within Opec who have exceeded their quotas, notably Kazakhstan and Iraq. However, the risks for Saudi Arabia are significant, as it gambles on corralling Opec members into compliance amidst rising recession risks due to the trade war. The kingdom requires oil prices at $90 per barrel to balance its budget, according to the International Monetary Fund. — new from Middle East Eye