Photo caption: OPEC logo
The Organisation of the Petroleum Exporting Countries and allies, known as OPEC+, is reportedly planning to accelerate oil output hikes, potentially bringing an additional 2.2 million barrels per day (bpd) back to the market by November, reported Reuters, citing sources.
This move comes as Saudi Arabia, the group’s leader, aims to penalise certain members for exceeding production quotas.
In a surprising turn of events, OPEC+ agreed to a larger-than-expected output increase for May, despite the backdrop of weak prices and slowing demand.
The decision, influenced by Saudi Arabia, was seen as a punitive measure against Iraq and Kazakhstan for their lack of adherence to production quotas.
Riyadh’s strategy indicates a shift from supporting the market to a focus on expanding market share.
The timing of these developments is noteworthy, occurring just days before US President Donald Trump’s scheduled visit to Saudi Arabia.
Trump has been vocal in urging OPEC+ to boost oil production to mitigate gasoline prices, which are contributing to domestic inflation pressures in the US.
OPEC+ has been implementing production cuts of nearly 5 million bpd, about 5% of global demand, in stages since 2022 to bolster the market.
Although many of these cuts are set to continue until the end of 2026, OPEC+ resolved in December to phase out the voluntary 2.2 million bpd cuts by September 2026.
However, the group decided in April to expedite this process starting in May.
Following the trend, OPEC+ is expected to approve further accelerated hikes for the subsequent months, provided that compliance among members such as Iraq and Kazakhstan do not improve.
Should these countries continue to disregard their production limits, the voluntary cuts could be eliminated by November, the report said.
Kazakhstan has already shown a willingness to prioritise national interests over OPEC+ agreements, with its April oil output exceeding its quota.
Meanwhile, oil prices have suffered, hitting a four-year low in April, which could be exacerbated by news of the accelerated output hikes unless compliance among OPEC+ members improve, suggests UBS analyst Giovanni Staunovo.
“OPEC+ eyes 2.2 million bpd output surge by November” was originally created and published by Offshore Technology, a GlobalData owned brand.
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