OPEC+ to Increase Oil Output by 2.2 Million Barrels per Day by November
OPEC+ is set to ramp up oil production by as much as 2.2 million barrels per day by November, according to five sources within the group. This decision comes as Saudi Arabia, the de facto leader of OPEC+, looks to penalize members who have exceeded their production quotas.
In a surprising move in April, OPEC+ announced a larger-than-expected output hike for May, despite the weak prices and slowing demand in the market. Saudi Arabia orchestrated this decision to reprimand countries like Iraq and Kazakhstan for their lack of compliance with production quotas, signaling a shift in Riyadh’s willingness to support the market.
This change in policy from Saudi Arabia suggests a desire to increase its market share, a significant departure from the past five years spent balancing the market through substantial output cuts. OPEC+ members, including OPEC and allies like Russia, have been cutting output by nearly 5 million barrels per day, equivalent to 5% of global demand. These cuts were implemented in stages since 2022 to stabilize the market, with many set to remain in place until the end of 2026.
In December, OPEC+ agreed to gradually phase out the voluntary 2.2 million barrels per day of cuts by the end of September 2026. However, in April, the group decided to expedite this process starting in May. The latest decision includes another significant output hike for June, with plans to release nearly 1 million barrels per day.
Moving forward, OPEC+ is expected to continue this trend by approving additional output hikes for July, August, September, and October if countries like Iraq and Kazakhstan fail to improve compliance and deliver compensation cuts. If compliance does not improve, the voluntary cuts will be fully withdrawn by November.
Kazakhstan’s defiance of OPEC+ last month, with its energy minister prioritizing national interests over the group’s production levels, has added to the challenges faced by the organization. Despite a 3% decrease in output, Kazakhstan exceeded its OPEC+ quota in April, further complicating the situation.
The news of accelerated output hikes has already had an impact on oil prices, which fell to a four-year low in April, dropping below $60 per barrel. The uncertainty surrounding global economic conditions, exacerbated by President Trump’s tariff policies, has also contributed to the market’s volatility.
Analysts predict that oil prices will continue to be affected by the news of increased production until compliance within OPEC+ improves. The group’s decision to accelerate output hikes reflects a strategic shift in Saudi Arabia’s approach to the market, with implications for the broader oil industry.
