Oil Prices Drop Over 2% Despite OPEC+ Upheaval, Geopolitical Tensions

Oil prices fell sharply in Thursday trading, with West Texas Intermediate (WTI) crude dropping $2.74 to settle at $104.14 per barrel, a decline of 2.56%. Brent crude also fell, down $1.68 to $101.80 per barrel. The price for Bakken crude at the wellhead is trading at a discount of $3.42 to the WTI benchmark.

The sell-off comes despite ongoing geopolitical concerns in the Middle East that have underpinned recent price strength. Daniel Takieddine, Co-Founder and CEO of Sky Links Capital Group, noted that prices had surged amid increasing concerns about the region's geopolitical situation, according to Rigzone.

The market is concurrently grappling with the shock departure of the United Arab Emirates (UAE) from the OPEC+ alliance, effective May 1. The UAE has frequently clashed with fellow producers over output quotas as it seeks to utilize more of its growing spare capacity, which it aims to increase to 5 million barrels per day by 2027, OilPrice.com reported.

In response to the UAE's exit, Russia has moved to dismiss fears of a price war and reaffirmed its commitment to the OPEC+ group. Russia’s Deputy Prime Minister Alexander Novak said on Thursday that Russia will remain in OPEC+ and does not expect a price war following the UAE's abrupt exit. "In the current situation, how can there be a price war amid a shortage on the global market?" Novak said, according to OilPrice.com. He cited a "deepest supply crisis" where "huge volumes of oil are not reaching the market now" due to serious logistics hurdles in the Middle East.

Novak stated that the OPEC+ alliance allows producers to manage market risks during crises and maintain industry investment, and therefore Russia "will continue to work together" with the remaining members. Rigzone separately reported that Russia said it has no plans of leaving its alliance with OPEC after the UAE's decision.

For Bakken operators, the price drop directly impacts cash flow and drilling economics, though prices remain above the $100 threshold. The Bakken differential of -$3.42 versus WTI indicates regional crude is priced at approximately $100.72 per barrel. The market's volatility, driven by OPEC+ cohesion questions set against a backdrop of tangible supply risks, underscores the fragile balance supporting current price levels. Operators will watch for whether the UAE's departure leads to other members pushing for higher production quotas, which could pressure prices further, or if the remaining OPEC+ group, led by Saudi Arabia and Russia, maintains a firm grip on supply.