OPEC+ has shifted to a more aggressive oil production strategy, signaling a move to reclaim market share even if it means enduring lower prices in the short term. Over the last two months, the group—led by Saudi Arabia—has accelerated the rollback of voluntary production cuts and is now planning faster increases in output levels.
After a long pause, OPEC+ members agreed in March to begin gradually easing the 2.2 million barrels per day (bpd) in voluntary cuts announced in November 2023. In a surprising turn, the group bundled three months of scheduled increases into a single 411,000 bpd hike for May, and repeated that approach for June. These moves mean the full unwind of voluntary cuts could be completed by September, though some countries will continue making compensation cuts well into 2026.
The latest strategy reflects frustration within the group, especially from Riyadh, over non-compliance by key members such as Iraq and Kazakhstan. Despite commitments, both countries have exceeded their production targets. Kazakhstan, for example, plans to produce about 1.75 million bpd in May, far above its allowed limit of 1.37 million bpd. Its ramp-up is largely driven by expansions at major oil fields like Tengiz, Kashagan, and Karachaganak, which are run by foreign and Chinese partners.
Iraq also continues to struggle with compliance. While it has improved its output discipline slightly this year, its production still exceeds its quota. Economic pressures, infrastructure challenges, and political instability make deeper cuts difficult. Iraq also relies heavily on oil to meet domestic energy needs, especially during summer.
Despite these issues, OPEC+ may not be solely focused on its own members. The real target could be U.S. shale producers. Lower oil prices, when combined with rising costs and trade tariffs, are hitting American firms hard. Diamondback Energy, a major U.S. operator, recently stated that domestic onshore oil production may have peaked and could begin declining this quarter.
This shift could significantly impact global oil balances. The International Energy Agency (IEA) forecasted U.S. production growth of 490,000 bpd this year, but a decline would more than offset any OPEC+ compliance failures. That makes the group’s current strategy especially potent—even if nations like Kazakhstan and Iraq resist pressure to cut.
Kazakhstan, in particular, is unlikely to change course quickly. Its economy is less dependent on oil, with strong revenue from gold and uranium exports. The government has also shown little inclination to override production decisions made by foreign-led consortia.
Ultimately, while OPEC+ uses compliance as a stated objective, its accelerated production increases suggest a broader strategy. If U.S. shale falters, OPEC+ could regain dominance in global oil markets—even if tensions remain high within its own ranks.
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