By Alexander Miller, consultant in energy markets. Eurasia Business News, May 3, 2025. Article n°1507.
Photo : Sunset on oil refinery in Middle East, 2025. Photo credit : Swann Collins.
Eight OPEC+ countries, which voluntarily limited oil production by 2.2 million barrels per day in 2023, decided to increase production by 411 thousand bpd from June, which is equivalent to three monthly increases, OPEC said in a press release.
In March, it was decided that the increase in production would begin in April on a monthly basis and would last until September 2026, that is, with a monthly step of about 135-140 thousand bpd.
This decision is part of a strategy to unwind previous production cuts totaling around 2.2 million barrels per day, reflecting a shift from supply restraint to gradual increases.
Key reasons behind this move include:
- Market fundamentals: OPEC+ states the oil market remains “healthy,” with low stockpiles and steady demand growth, especially in emerging economies.
- Compliance issues: Some members like Iraq and Kazakhstan have exceeded quotas, prompting OPEC+ to adjust official limits upward to accommodate this overproduction and maintain alliance unity.
- Strategic balance: Saudi Arabia, the de facto leader, is reluctant to shoulder disproportionate production cuts alone and aims to balance market share against rising non-OPEC output from countries like the U.S. and Brazil.
- Economic pressures: Lower oil prices and global trade tensions have led analysts to revise demand forecasts downward, but OPEC+ anticipates seasonal demand increases and seeks to prevent price spikes that could harm consumption.
Despite oil prices falling to four-year lows near $60 a barrel, OPEC+ plans to continue monthly reviews and maintain flexibility to pause or reverse increases if market conditions worsen. The group’s approach signals a pragmatic adaptation to evolving market realities while trying to sustain revenue and market stability through 2025.
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Only two OPEC+ members – Saudi Arabia and Algeria – in June will be able to produce at the level of established quotas – 9.367 million bpd and 928 million bpd, respectively. The remaining six members of the G8 will be forced to reduce their plans for a certain amount of compensation, calculated depending on the degree of exceedances of oil production in previous months.
According to the current quotas and the latest compensation schedules, the oil production plan in Russia next month is 9.05 million bpd, in Iraq – 3.946 million bpd, in the UAE – 3.082 million bpd, in Kuwait – 2.443 million bpd, in Kazakhstan – 1.368 million bpd, in Oman – 760 thousand bpd.
Following the meeting on Saturday, eight OPEC+ countries confirmed their intention to fully compensate for any overproduction starting in January 2024, OPEC said in a release.
Earlier, the Kazakh authorities reported that in March oil production in the country was higher than the quota set by the alliance, but noted that they are negotiating with oil companies and expect it to be reduced in April to the required level, taking into account compensation.
The next meeting of the eight OPEC+ countries is scheduled for June 1 – a decision will be made on production quotas in July.
Meanwhile, the next semi-annual ministerial meeting of all OPEC+ countries, as well as the Ministerial Monitoring Committee (JMMC), is scheduled for May 28.
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© Copyright 2025 – Eurasia Business News. Article no. 1507.
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