Oil Prices Plunge Over 3.5% Amid OPEC Turmoil, Large Inventory Draws

Oil prices fell sharply on Tuesday, with both major benchmarks dropping more than 3.5%, as geopolitical upheaval within OPEC outweighed a significant reported drawdown in U.S. inventories. West Texas Intermediate (WTI) crude settled at $102.41 per barrel, down $4.01 or 3.77%. Brent crude finished at $110.27, down $4.17 or 3.64%, according to live price data.

The day's steep decline was driven primarily by the market's reaction to the United Arab Emirates' shock exit from OPEC, effective May 1. According to a report from OilPrice.com, the UAE was OPEC's third-largest producer, pumping around 3.5 million barrels per day, and was seen as a key "swing oil producer" with significant spare capacity. Its departure reduces the cartel's cohesion and raises questions about its future ability to manage supply and prices.

"The United Arab Emirates was in a unique position in OPEC+," said James Davis of FGE, as reported by Rigzone. The move is seen as commercially motivated, allowing state-owned ADNOC to pursue production growth targets of 5 million bpd by 2027 free from OPEC quotas.

The price drop occurred despite bullish U.S. inventory data from the American Petroleum Institute (API). The API estimated a substantial crude oil draw of 8.1 million barrels for the week ending May 1, far exceeding analyst expectations of a 2.8-million-barrel draw, OilPrice.com reported. Product inventories also saw large declines, with gasoline down 6.1 million barrels and distillates down 4.6 million barrels.

The reported draw from the Strategic Petroleum Reserve (SPR) continued, with 5.2 million barrels leaving stockpiles, bringing the total to 392.7 million barrels—the lowest level since November 2024.

Implications for the Bakken

For Bakken operators, the day presented a mixed picture. The sharp drop in the global benchmarks directly pressures local wellhead economics. The Bakken differential to WTI was reported at -$3.42, meaning Bakken crude was priced at approximately $98.99 per barrel.

The significant inventory draws, particularly at the Cushing, Oklahoma, hub—which fell by an estimated 1 million barrels—suggest underlying physical demand remains strong, which could provide a floor under prices. However, the newfound uncertainty in the OPEC+ alliance introduces volatility and the potential for increased global supply if cohesion breaks down further.

Operators will be watching for confirmation of the API data from the U.S. Energy Information Administration's official report Wednesday. The clash between a tightening physical market and a destabilized geopolitical supply framework is likely to define price action and planning for North Dakota producers in the near term.