Oil prices rebounded on Friday after Russia’s deputy prime minister suggested oil cartel Opec+ could reverse a plan to increase crude production.
Alexander Novak said that while Opec+ would proceed with a plan to start pumping more oil in April, the group could “always play in the other direction” if the market became oversupplied.
In response, the price of benchmark Brent crude, which has been sinking since mid-January on concerns over too much supply and the outlook for global economic growth, rose as much as 2.8 per cent to more than $71 a barrel, and was later trading at about $70.20.
In a further boost to prices, Chris Wright, the US energy secretary, said the US plans to buy $20bn of oil to refill its strategic petroleum reserve “just close to the top”.
Officials from Kazakhstan, which has pumped well above its official Opec+ quota, promised to cut production in March, April and May. The country’s quota is just under 1.5mn barrels a day (b/d), but production has recently increased at its Tengiz field, and analysts at OilX, a data company, estimated the country’s output topped 2mn b/d in February for the first time in more than a year.
Friday’s price rise came after anxiety over a looming glut of oil, with major producers seemingly set to increase their output even as concerns grow over the health of the US economy and the impact of President Donald Trump’s trade tariffs.
The Brent price, which rose above $82 in mid-January, fell below $70 this week for only the third time since before Russia’s 2022 invasion of Ukraine.
The worries were compounded by a surprise statement on Monday from Opec+, which has been holding several million barrels a day back from the market to prop up prices, that it would now start increasing production.
“The economic environment looks turbulent,” said one large trader. “The market was already going to be oversupplied, particularly into the back end of this year.”
The market got a further jolt on Tuesday when Peter Navarro, a trade adviser to Trump, suggested on Fox News that if oil fell to $50 a barrel it would help tame inflation and allow the Federal Reserve to start cutting interest rates.
The Trump administration has repeatedly said it would like to see cheaper oil, even though a significant fall would also hurt the US oil industry.
Analysts at Rapidan Energy Group said they assume the White House “desires crude to be in the $40 to $50 range”, even though Bob McNally, the Rapidan founder and former adviser to president George W Bush, later told the Financial Times that such a price would be “well below the level most US shale oil producers need to drill profitably”.
Nevertheless, Opec+ decided to press ahead with a small planned increase to production, the first step to returning some 2.2mn daily barrels over the next 18 months. Analysts said the decision was supported by data showing inventories had fallen and needed to be replenished.
Opec+ also wants to curb the behaviour of Iraq and Kazakhstan, which have both been pumping above their agreed quotas, say analysts.
The large trader said: “Opec is telling them that if they get in line the market is balanced until the end of the year, if not, the market will be oversupplied. The faster those guys figure it out, the better for the market.”
Nevertheless, one person who met senior Opec+ staff recently said the cartel is “incredibly worried” about the global economy. “In all the years I have talked to Opec, I have never seen them so concerned,” the person added.
Martijn Rats, an analyst at Morgan Stanley, cut his price target for Brent by $5 a barrel to $70 for the second quarter and to $67.50 for the final six months of the year. “Opec wants to test whether the market can sustain higher supply,” he said in a note. But he added that none of the recent US economic data releases were supportive for oil demand.
As well as uncertain US growth, Chinese demand for diesel and petrol appears to have peaked because of the fast rollout of electric vehicles. China’s crude oil imports fell 5 per cent in the first two months of 2025 compared with the same period last year, according to customs data released on Friday.
The country’s National Development and Reform Commission this week said it wants refineries to curb their production of fuel and switch to making more petrochemicals. China’s National Bureau of Statistics said in its annual report last week that the country’s consumption of crude had fallen 1.2 per cent in 2024.
“In aggregate, demand is looking uncertain and all the important barrels are still flowing,” said the large trader. But he added that with China’s stockpiles looking thin, the country would take advantage of lower prices to replenish its reserve, putting a floor under prices to stop them falling beyond the “low 60s”.
