Un seul compte Saxo suffit pour accéder à nos plateformes.
Crude climbs as market digests OPEC hike and shale slowdown risks
Matières premières
Ole Hansen
Head of Commodity Strategy
This content is marketing material
Key points:
OPEC+ raises output again: Saudi-led supply boost aims to enforce compliance and pressure high-cost rivals
U.S. shale feels the pinch: Sub-$60 WTI threatens profitability, with top producers cutting spending and signs that production growth is stalling.
Compliance and sanctions in focus: Overproduction by Iraq, Kazakhstan, and UAE, plus rising Iranian and Venezuelan output remains a challenge for OPEC+
Associated gas at risk: Lower shale output could drag down U.S. natural gas supply, just as global demand for cleaner energy sources rises.
Crude prices climb for a second consecutive day, fully reversing Monday’s sharp decline, which was triggered by an OPEC+ announcement to increase supply more aggressively than expected for a second straight month. The move, largely driven by Saudi Arabia, appears to be a calculated response to persistent non-compliance within the group—particularly from Kazakhstan—and also aligns with former President Trump’s push for lower oil prices. Over time, OPEC could benefit from this strategy through increased market share, as sustained low prices may challenge the economic viability of higher-cost producers. Part of the rebound in crude prices stems from the fact that last week's market already priced in the likelihood of another production hike. This occurred even as broader risk sentiment improved amid growing optimism around U.S.-China trade negotiations. As seen in the WTI crude chart, the most recent selloff halted just above the early April “Liberation Day” low of USD 55 per barrel. Strong technical resistance remains in place ten dollars higher at USD 65 per barrel.
OPEC+ supply strategy and compliance issues
With the latest planned addition of 411,000 barrels per day (b/d) in June, the OPEC+ alliance will already have unwound more than 40% of the 2.2 million b/d in production cuts implemented between 2022 and August 2023. However, the group’s credibility has been undermined by widespread quota violations. Recent compliance data suggests cumulative overproduction of around 800,000 b/d, with Iraq, Kazakhstan, and the UAE cited as the main culprits.
Complicating the picture further, Iran and Venezuela—both under U.S. sanctions and exempt from OPEC+ quotas—have collectively increased their output by over 1 million b/d since September 2022. If the U.S., under renewed focus from President Trump, manages to enforce stricter sanctions on these two nations and if compliance within OPEC+ improves, the actual net increase in global supply could be far smaller than market fears suggest. Combined with a potential output decline from high-cost producers, this scenario could help rebalance the market more quickly than expected.
U.S. production plateau and associated gas risks
U.S. oil production growth is showing signs of fatigue. Two major shale operators have announced spending cuts in response to the price downturn, raising concerns that American output may have already peaked. Sub-$60 WTI prices put many shale operations at risk of becoming unprofitable, threatening future investment, production, and ultimately, market share—particularly to lower-cost OPEC+ producers.
Annualized U.S. oil production growth has slowed to 2.8%, with shale oil—the source of roughly three-quarters of total U.S. output—growing at less than 2%. If WTI prices remain below USD 60 for an extended period, a production rollover becomes increasingly likely, opening the door for rival producers to fill the gap.
It's also important to consider the knock-on effect on natural gas. More than one-third of total U.S. natural gas production comes from associated gas—a byproduct of crude oil extraction—especially from major shale plays like the Permian Basin in Texas and southeastern New Mexico. A downturn in oil output from these fields would likely lead to a decline in associated gas production as well. This comes at a time when demand for natural gas is expected to rise substantially, both in the U.S. and globally, as utilities shift toward cleaner power generation sources.
Recent commodity articles:
5 May 2025: COT Report: Dollar-selling persists; Crude length trimmed ahead of OPEC output hike
1 May 2025: Gold corrects sharply from record highs as Chinese demand pauses
29 April 2025: Copper navigates energy transition supply shocks and market turmoil
28 April 2025: COT Report: Continued gold selling; USD weakness drives record JPY long
25 April 2025: Commodities weekly Energy slump overshadows strength in gold and agriculture
23 April 2025: Blowout top leaves Gold in consolidation mode
22 April 2025: Commodities return Why allocation matters
16 April 2025: Whats next as gold hits our USD 3300 target
15 April 2025: COT Reports show hedge funds racing to cash post-Liberation Day
11 April 2025: Commodities weekly As chaos reigns whats next for markets
10 April 2025: YouTube Interview: Gold, silver, copper, oil - prices, supply, demand in 2025
8 April 2025: Golds deleveraging pullback fails to shake supportive outlook
8 April 2025: Golds deleveraging pullback fails to shake supportive outlook
7 April 2025: COT on Forex and Commodities - April 7 2025
4 April 2025: Commodities weekly Tariff-led recession pain triggers sharp reversal
3 April 2025: Tariff-related recession fears ignite widespread commodities selloff
2 April 2025: Commodity Outlook: Commodities rally despite global uncertainty
31 Mch 2025: COT Report: Ongoing USD selling amid mixed week for commodities
26 Mch 2025: Commodities show strength in Q1, led by a select few
25 Mch 2025: Crude oil Sanctions threat counters tariff-driven demand worries
24 Mch 2025: COT on Forex and Commodities - 24 March 2025
21 Mch 2025: Commodities weekly: High-flying precious metal sees profit taking
19 Mch 2025: Has the gold express already left the station?
17 Mch 2025: COT Report: Silver and copper stands out in week of energy weakness
14 Mch 2025: Gold surges past USD 3,000 as haven demand grows
12 Mch 2025: Tariffs and the energy transition: Key drivers of copper demand
11 Mch 2025: Gold holds steady despite deleveraging risks in volatile markets
10 Mch 2025: COT Report: Wholesale reductions in speculators' USD and commodity longs
7 Mch 2025: Commodities Weekly: Tariffs, trade tensions, fiscal bazooka, and Ukraine
5 Mch 2025: Tariff threat disconnects HG copper from global market
4 Mch 2025: Stagflation and geopolitical tensions fuel renewed demand for gold
3 Mch 2025: COT Report: Broad retreat sees WTI longs slump to 15-year low
Podcasts that include commodities focus:
6 May 2025: Bears hang in at key levels as Palantir rides the retail whirlwind
23 April 2025: Trump going soft on tariffs versus the direction of travel.
11 April 2025: US and China are slipping into an economic war
4 April 2025: Markets melts down as recession risks go global
1 April 2025: Bracing for Liberation Day
25 Mch 2025: Did Trump just blink?
18 Mch 2025: US market found support, but how durable will it be?
14 Mch 2025: Is silver set to shoot the lights out?
10 Mch 2025: US un-exceptionalism is the theme
7 Mch 2025: US bear market risks ratchet higher. EUR train has left the station
4 March 2025: Are we on the verge of a big whoosh?