Supply relief hits markets
Oil prices dropped 4% on Wednesday after OPEC+ delegates told Reuters the group is preparing to add 400,000 barrels per day to global supply from July. Brent crude settled at $68.70, its lowest since January. West Texas Intermediate fell to $65.20.
The decision follows months of pressure from the White House, which has urged producers to boost output as gasoline prices hover near $3.50 per gallon nationally. Analysts say the move could reduce pump prices by 10 to 15 cents over the summer.
OPEC+ balances competing interests
Saudi Arabia and Russia — the cartel's two largest producers — have backed the increase. But some members, including Iraq and Nigeria, argued for maintaining current caps to preserve revenue. The compromise deal includes a review clause in September should prices fall further.
OPEC+ has managed production cuts since 2022 to support prices. Wednesday's announcement marks the first output increase in over a year, reflecting shifting calculations as global demand growth slows and US shale production climbs.
Impact on consumers and inflation
Lower oil prices offer relief for central banks fighting inflation. The European Central Bank and Federal Reserve have both cited energy costs as a factor in sticky consumer prices. Airline stocks rose on the news, with Delta and United both gaining over 3% in afternoon trading.
The Energy Information Administration expects US gasoline to average $3.35 in June, down from $3.80 in the same period last year.