In a strategic move aimed at stabilizing the global oil market, Russia, Kazakhstan, and Iraq have committed to a phased reduction in oil production totaling 2.284 million barrels per day (b/d) by September 2025. This decision, announced on Wednesday by the Organization of the Petroleum Exporting Countries (OPEC) Secretariat, follows the submission of compensation plans from these OPEC+ members for exceeding production targets in early 2024.
Iraq, Russia, and Kazakhstan collectively surpassed their crude production quotas by 1.184 million b/d, 480,000 b/d, and 620,000 b/d, respectively. Emphasizing the importance of adherence to production limits and the compensation mechanism, OPEC+ will maintain oil output at 35.52 million b/d in July, slightly below the pre-compensation target of 35.6 million b/d.
Significant adjustments to production schedules are anticipated, notably with a reduction of 355,000 b/d expected in October 2024, coinciding with maintenance activities at Kazakhstan’s Kashagan field. Looking ahead, additional reductions are scheduled for August and September 2025, amounting to 177,000 b/d and 195,000 b/d respectively, with the aim to reach an overall production target of 37.88 million b/d by September 2025.
Russia will implement substantial production cuts starting March 2025, targeting a reduction to 9.34 million b/d by October 2025, down from 9.139 million b/d produced in June 2024. Concurrently, OPEC+ has extended a 1.65 million b/d cut until the end of 2025, initially set to expire this year, while gradually phasing out a 2.2 million b/d cut introduced in November 2023 by September 2025.
Despite these efforts, OPEC+ anticipates challenges from non-OPEC production, forecasting growth of one million b/d in 2024 and 1.3 million b/d in 2025, primarily driven by the US, Brazil, Canada, Russia, Kazakhstan, and Norway. The US Energy Information Administration (EIA) projects US crude oil production to rise to 13.19 million b/d in 2024, reaching a record 13.65 million b/d by 2025.
These adjustments reflect OPEC+’s strategic approach to stabilizing oil prices amidst fluctuating global demand, as they continue to navigate market dynamics and balance supply levels.
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