Oil prices recovered on Friday after the Russian deputy prime minister suggested that the oil cartel OPEC+ could reverse plans to increase crude production.
Alexander Novak said OPEC+ is planning to start pumping more oil in April, but if the market is oversupplied, the group can “always play in the opposite direction.”
In response, the price of benchmark Brent crude, which has been sunk since mid-January due to too much supply and concerns about the outlook for global economic growth, rose 2.8% to over $71 a barrel, and was later trading at around $70.20.
US energy secretary Chris Wright said the US plans to buy $20 billion in oil and replenish the strategic oil reserve “just close” with a boost to prices.
Kazakhstan officials, which have far surpassed the official OPEC+ quota, have pledged to cut production in March, April and May. The country’s quota is less than 1.5 million barrels per day (b/d), but production has been rising in Tenget Field recently, with analysts at data company Oilx estimated in February it exceeded 2 million b/d for the first time in over a year.
Price rises on Friday came after looming oil unrest. Key producers appear to increase production despite growing concerns over the health of the US economy and the impact of President Donald Trump’s trade tariffs.
Brent Price, which surpassed $82 in mid-January, fell below $70 for the third time before Russia invaded Ukraine in 2022.
The concerns were exacerbated by a surprise statement from OPEC+ on Monday. OPEC+ is holding millions of barrels a day from the market until it raises prices, and is beginning to increase production.
“The economic environment looks turbulent,” said one large trader. “The market was already registered, especially in the backend this year.”
The market was even more shocked when Trump’s trade adviser Peter Navarro suggested on Fox News on Tuesday that if oil fell to $50 a barrel, it would tame inflation and help the Federal Reserve cut interest rates.
The Trump administration has repeatedly said that a major downturn would hurt the US oil industry.
Analysts at the Rapidan Energy Group assume that the White House “hopes to be in the $40-$50 range,” despite Bob McNally, former founder and former advisor of President George W. Bush, later told the Financial Times that such prices “have to be in the $40-$50 range.”
Nevertheless, OPEC+ has decided to move on with a small plan of production, the first step to returning around 2.2 million barrels daily over the next 18 months. Analysts said the decision was supported by data indicating that the inventory has fallen and needs to be restocked.
OPEC+ also wants to curb the actions of Iraq and Kazakhstan.
The large trader said: The faster they understand it, the better it is for the market. ”
Nevertheless, one person who recently met OPEC+ senior staff said the cartel is “incredibly worried” about the global economy. “In every year I spoke to OPEC, I’ve never seen them worry so much,” the person added.
Morgan Stanley analyst Martijn Rats reduced Brent’s price target to $70 for $5 per barrel in the second quarter and to $67.50 for the last six months. “OPEC wants to test whether the market can maintain a higher supply,” he said in the memo. However, he added that none of the recent US economic data releases support oil demand.
In addition to uncertain US growth, China’s demand for diesel and gasoline appears to have peaked due to the fast deployment of electric vehicles. China’s crude oil imports fell 5% in the first two months of 2025, according to customs data released on Friday.
This week, the country’s National Development and Reform Commission said it hopes refineries will curb fuel production and switch to petrochemical production. China’s National Bureau of Statistics said in its annual report last week that the country’s crude oil consumption fell by 1.2% in 2024.
“As a total, demand looks uncertain, and all the key barrels are still flowing,” the large trader said. However, he added that China’s stockpile looks thinner, so the country will use lower prices to replenish the reserves and place floors under prices to exceed “low ’60s’.”
