oil-producing alliance OPEC+ plans to quicken the pace of oil production increases, according to four unnamed sources
Oil Taps to Open Wide: OPEC+ Readies for Accelerated Output Hikes
In a move that could reshape the global oil market, OPEC+ is poised to turbocharge oil production increases, potentially unwinding its current voluntary cuts by October. The decision comes in the face of compliance issues among some members and evolving market dynamics.
Shaking Things Up
The oil giants, led by Saudi Arabia and including allies like Russia, are looking at faster hikes for August through October 2025, with a potential unwinding of the 2.2 million barrels per day (bpd) voluntary cuts if Iraq and Kazakhstan—perennial offenders on the compliance front—fail to shape up and deliver compensation cuts, according to four OPEC+ insiders.
The Non-compliant Rebels
Kazakhstan, for one, has thumbed its nose at OPEC+ directives this month, with its energy minister declaring prioritization of national interests over those of the consortium in oil production decisions. Kazakhstan's April 2025 output surpassed its OPEC+ quota despite a 3% decline. Iraq's compliance track record remains shaky, raising questions about their ability to abide by the production quotas going forward.
Price Plunge Triggers Acceleration
The move toward accelerated hikes comes as oil prices plummeted to a four-year low of $60 per barrel in April 2025, largely due to the initial surge in OPEC+ output hikes and worries about a global economic slowdown driven by trade tensions. Even as oil prices drop, Saudi Arabia seems reluctant to support the market with additional supply cuts.
The Long Game
It's important to note that OPEC+ is still mandated to keep almost 5 million bpd in broader cuts locked in through the end of 2026. The current adjustments primarily target the 2.2 million bpd voluntary portion agreed upon in 2023, which was initially set to wind down by September 2026. However, the pace of this wind-down has been accelerated, thanks to this April's agreement.
In other developments, the United Arab Emirates (UAE) clinched an additional 300 thousand barrels per day (kb/d) production target hike as part of the revised agreement.
So, buckle up and prepare for a wild oil market ride as we head into the second half of 2025. Let's see what the chips fall where the laggards are concerned, and whether the world can handle an additional 2.2 million bpd supply surge from OPEC+!
- The defi in the oil market could see significant changes as OPEC+ readies to accelerate output hikes.
- The increased production may lead to a potential unwinding of the current voluntary cuts by October 2025, providing a boost to the energy and finance industry.
- Among OPEC+ members, Iraq and Kazakhstan have been flagged for their low compliance levels, potentially affecting the overall energy exports.
- While the move towards accelerated hikes is a response to the oil price plunge and global economic concerns, OPEC+ is still intent on maintaining almost 5 million barrels per day in additional cuts until the end of 2026.
- Beyond the OPEC+ decision, the UAE has secured an additional production target hike as part of the revised agreement, further intensifying the competition in the oil-and-gas industry.
- As we approach Saturday and the second half of 2025, it will be worth keeping an eye on how these ongoing developments impact compliance and market dynamics within OPEC+ and the oil industry at large.
