The price of WTI crude oil has settled at $61.99, declining by $4.96 or 7.40%. This reduction is attributed to tariff news, expectations of slower global growth, and an announcement from the OPEC+ alliance about a larger-than-anticipated increase in oil production.
Starting in May 2025, the OPEC+ group will raise output by 411,000 barrels per day, implementing three months’ worth of planned increases in one go. For the trading week, crude oil prices dropped by 2.19%, marking the worst decline since a 12.72% fall during the week of March 13, 2023.
Impact Of OPEC+ Announcement
The earlier portion of this analysis outlines a sharp drop in WTI crude oil prices, which fell by nearly eight percent. This movement downward is tied to two main triggers: new tariffs and gathering concerns over international economic momentum. Additionally, OPEC+’s announcement to ramp up supply in a more aggressive fashion than expected has created further downward pressure. The group will boost its daily output by over 400,000 barrels starting May next year, condensing what was initially a gradual approach into a single step. For context, this marks oil’s steepest fall on a weekly basis in more than a year.
The takeaway here is pretty straightforward — falling prices aren’t merely reflecting a short bout of volatility. They result from a combination of policy shifts and broader signs that global demand may not be matching prior projections. The decision by OPEC+ essentially tilts the supply balance, making it harder for prices to find upward stability unless demand picks up sharply, which doesn’t look likely just yet.
Travelling back through recent trading behaviour, we’ve seen open interest expand slightly while implied volatility jumped following the OPEC+ statement. That tells us traders are repositioning, with fresh short interest and hedging activity entering the mix as broader expectations shift. There are strong hints that positioning had been skewed towards higher prices, only to be caught wrong-footed by the sudden production change.
The mechanics here are less about knee-jerk reactions and more about preparing for sustained weakness into the late second quarter. Given the timing of the supply change — several months out, but clearly priced in already — it might be tempting to assume volatility will settle soon. But structurally, the balance now leans in favour of shorter-term pressure, especially with economic data from large consumers showing signs of strain.
Market Opportunities And Risks
What does that imply? Opportunity, but not without risk. With forward curves reacting, calendar spreads have started to loosen slightly, reflecting less urgency about supply tightness in the near term. That matters in products too, with refined fuel demand showing little inclination to fill the gap. We’ve observed a softness in margins and demand across distillates, meaning refiners are likely to remain cautious.
Hence, when we look at strategies, agility matters. Keep a chart on directional bias, but treat short volatility positions with care — we’re not yet seeing the sort of rebalancing that would suggest downside has run its course. Longer-dated puts are beginning to attract bids, and that’s not out of caution only. There’s now a pricing-in of a structural supply glut, especially if slower industrial activity persists through the second half of the year.
We’re also watching product cracks closely. The widening of crack spreads earlier in the quarter has begun to reverse, hinting that refiners might cut back run rates. That could slow the crude build in inventories, but only modestly without a rebound in transport or freight-related demand. Between the structural signals and recent price action, there’s a case for flexible but defensive positioning.
In short, the market is digesting more than just one headline. Reactions have been measured but firm, and forward pricing suggests we might remain under pressure without a major catalyst. Traders who anticipate short squeezes without an uptick in macro data might find themselves leaning the wrong way — at least for now.
