International Oil Market in Crisis: How Much Longer Can Oil Prices Hold Up Amid OPEC+ Production Increase?

OPEC+'s control is collapsing.

This week, WTI crude oil experienced a sharp decline, dropping 2%, failing to hold above the critical support level of $65.0. Market rumors suggest that some OPEC+ members are considering further accelerating production in June, with a scale similar to May—it’s worth noting that the May increase was already raised to 411,000 barrels per day, three times the original plan. This reflects intensifying internal conflicts within OPEC+.

Member countries acting independently, the coalition is splitting

The root of the problem lies in some OPEC+ members not adhering to their pledged production cuts after previously increasing output. Kazakhstan, which was called out, remains unbowed; its energy minister publicly stated that the country will prioritize national interests over the overall interests of OPEC+, even outright saying that it cannot cut production from large oil fields controlled by foreign oil giants.

This behavior challenging OPEC+'s authority indicates what? Control over resources is becoming decentralized, and the organization’s actual grip on key capacities is eroding. When a member can confidently say “no,” the entire joint production cut mechanism begins to loosen.

The real adversary comes from overseas: the shale oil revolution

The chaos within OPEC+ is fundamentally due to external factors, primarily the United States.

U.S. shale oil companies, with their low costs and flexible extraction capabilities, have broken the traditional oil supply pattern through continuous technological innovation. Currently, U.S. crude oil production has surpassed the pre-pandemic peak of 2020, reaching over 13 million barrels per day. The U.S. Energy Information Administration (EIA) even forecasts that by 2027, U.S. output will climb to 14 million barrels per day and maintain that level thereafter.

Under the policy environment promoted by the Trump administration, which encouraged energy independence and increased production, this trend will become even more pronounced. Global demand is impacted by U.S. tariffs and rising production from competitors, further squeezing OPEC+'s strategic space.

Supply-demand contradictions are about to enter a vicious cycle

This is the key dilemma: many OPEC+ members need higher oil prices to balance their national finances. When oil prices fall, these countries tend to increase production to seize market share and fill budget gaps. Large-scale production increases then push prices down further, creating a vicious cycle.

Once Saudi Arabia also abandons resistance and countries start ramping up output, a supply glut will occur. Under the new pattern of the international oil market, this oversupply situation will continue to worsen until oil prices drop to a sufficiently low level—based on the current economic boundaries of shale oil, this bottom could be below $50.

In the short term, the international oil market faces not only weak demand but also self-destruction on the supply side. For traders holding positions, the upcoming trend warrants close attention.