May 5, 2025
OPEC+ to accelerate oil production increases.
OPEC+ is poised to speed up oil output increases and may reintroduce as much as 2.2 million barrels per day by November, according to five sources from the group. This move comes as Saudi Arabia, the group's leader, aims to penalize certain members for exceeding their production quotas.
In April, OPEC surprised the oil market with a larger-than-expected output increase for May, despite falling prices and decreasing demand. Saudi Arabia initiated this strategy to discipline Iraq and Kazakhstan for not adhering to production quotas, indicating its reluctance to support the market any longer.
These events unfold just days before U.S. President Donald Trump’s visit to Saudi Arabia to discuss an arms deal and a nuclear agreement. Trump has consistently urged OPEC+ to increase oil production to alleviate rising gasoline prices amid domestic inflation pressures from tariff disputes.
Saudi Arabia's change in policy signals a desire to gain market share, departing from a five-year period of managing market balance through significant output reductions. OPEC+, which consists of OPEC members and allies like Russia, is currently cutting production by almost 5 million barrels per day, representing 5% of global demand. These cuts have been implemented in stages since 2022 to stabilize the market, with many expected to remain until the end of 2026.
In December, OPEC+ had decided to gradually eliminate the 2.2 million barrels per day from the total cuts by the end of September 2026 but opted to expedite this process starting in May. Recently, the group agreed to another significant output increase for June, totaling nearly 1 million barrels per day across April to June.
OPEC+ is likely to continue this pattern and may agree in June to release an additional 411,000 barrels per day in July, as indicated by the anonymous sources. Saudi Arabia reiterated its warnings regarding poor compliance.
OPEC, the Saudi government's communications office, and the office of Russian Deputy Prime Minister Alexander Novak did not respond immediately for comments. The group may approve further accelerated hikes for August, September, and October if compliance from Iraq, Kazakhstan, and other underperformers does not improve and compensation cuts are not delivered. If compliance remains unsatisfactory, the voluntary cuts could be reverted by November concerning the 2.2 million barrels per day cut by eight members.
Kazakhstan's energy minister recently stated that the country would prioritize national interests over OPEC+ agreements, leading to April production that exceeded its quota despite a 3% decline.
Oil prices fell to a four-year low below $60 per barrel in April due to the accelerated hikes from OPEC+ and concerns over a global slowdown from Trump’s tariffs. According to UBS analyst Giovanni Staunovo, the news of increasing output will likely suppress oil prices until compliance improves.
In April, OPEC surprised the oil market with a larger-than-expected output increase for May, despite falling prices and decreasing demand. Saudi Arabia initiated this strategy to discipline Iraq and Kazakhstan for not adhering to production quotas, indicating its reluctance to support the market any longer.
These events unfold just days before U.S. President Donald Trump’s visit to Saudi Arabia to discuss an arms deal and a nuclear agreement. Trump has consistently urged OPEC+ to increase oil production to alleviate rising gasoline prices amid domestic inflation pressures from tariff disputes.
Saudi Arabia's change in policy signals a desire to gain market share, departing from a five-year period of managing market balance through significant output reductions. OPEC+, which consists of OPEC members and allies like Russia, is currently cutting production by almost 5 million barrels per day, representing 5% of global demand. These cuts have been implemented in stages since 2022 to stabilize the market, with many expected to remain until the end of 2026.
In December, OPEC+ had decided to gradually eliminate the 2.2 million barrels per day from the total cuts by the end of September 2026 but opted to expedite this process starting in May. Recently, the group agreed to another significant output increase for June, totaling nearly 1 million barrels per day across April to June.
OPEC+ is likely to continue this pattern and may agree in June to release an additional 411,000 barrels per day in July, as indicated by the anonymous sources. Saudi Arabia reiterated its warnings regarding poor compliance.
OPEC, the Saudi government's communications office, and the office of Russian Deputy Prime Minister Alexander Novak did not respond immediately for comments. The group may approve further accelerated hikes for August, September, and October if compliance from Iraq, Kazakhstan, and other underperformers does not improve and compensation cuts are not delivered. If compliance remains unsatisfactory, the voluntary cuts could be reverted by November concerning the 2.2 million barrels per day cut by eight members.
Kazakhstan's energy minister recently stated that the country would prioritize national interests over OPEC+ agreements, leading to April production that exceeded its quota despite a 3% decline.
Oil prices fell to a four-year low below $60 per barrel in April due to the accelerated hikes from OPEC+ and concerns over a global slowdown from Trump’s tariffs. According to UBS analyst Giovanni Staunovo, the news of increasing output will likely suppress oil prices until compliance improves.