OPEC and the OPEC+ alliance recently celebrated as Brent oil prices surged above $87 per barrel, driven by strong demand signals and supply concerns during the hurricane season. However, the joy was tempered by persistent challenges from members failing to adhere to agreed production cuts.
Despite Saudi Arabia’s commitment to pump 9 million barrels per day (bpd) of crude, some OPEC+ members such as Iraq, Kazakhstan, and Russia continue to overproduce, undermining the alliance’s efforts. Plans to ease voluntary cuts in the fourth quarter of this year remain tentative, contingent upon market conditions.
Iraq, OPEC’s second-largest producer, has repeatedly missed its production targets, accruing substantial overproduction. Alongside Kazakhstan, these countries have been granted until September 2025 to compensate for exceeding their quotas, but there’s little evidence of compliance thus far.
Internal documents reveal a history of non-compliance, echoing similar struggles faced in previous years despite compensation mechanisms being in place. In early 2024 alone, Iraq and Kazakhstan were estimated to have collectively overproduced by significant margins.
Recent production data indicates that Iraq slightly reduced output in June but still exceeded its quota by nearly 200,000 bpd. Similarly, Kazakhstan surpassed its quota, despite assurances to rectify the situation promptly.
While OPEC+ has begun publicly disclosing overproduction levels, uncertainties persist over its ability to enforce compliance effectively. Continued overproduction threatens to diminish the effectiveness of the group’s efforts to stabilize the oil market.
In summary, while soaring oil prices provide temporary relief, the persistent issue of overproduction among key OPEC+ members highlights ongoing challenges for the alliance in maintaining market stability.
Related topics:
Senate Initiates Probe Into Oil And Gas Producers
Saudi Arabia Signs Agreement With OPEC Fund To Support Economic Recovery
