26/04/2025
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26/04/2025
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WITH Brent crude oil prices hovering around $67 per barrel, OPEC+ appears to be running out of patience. The group is set to pump more oil into the already saturated market, regardless of its outcome, which could further weaken the oil prices. However, O P E C + ’ s justification for its intention remains unclear. It raises questions about the reasoning behind pumping more oil at a time when global demand is stagnant and international trade is nearly at a standstill, largely due to the ongoing tariff war between the United States and China. Is this move part of a price war aimed at reclaiming OPEC+’s traditional market share from new suppliers who have benefited from the organization’s production quotas? If so, it may serve the interests of non-OPEC+ producers by keeping prices stable at the expense of OPEC+ members themselves.
Starting in June, the oil organization is set to increase production for the second consecutive month, largely due to some member states failing to comply with agreed quotas, most notably Kazakhstan and Iraq. This non-compliance has contributed to further weakening of oil prices. Both countries have found excuses for not adhering to their committed quotas, citing national interests and concerns over potential damage to oil wells if production is halted. Iraq, which is the largest over-producer among them, has pledged to curb output but has continued to raise its production every month since April.
In any case, lack of total compliance with OPEC quotas is not uncommon, and OPEC+ has a long history of quota violations. Typically, commitments hold for the first 30 days, after which the breakdown of the quota system gradually begins to unfold. The current weak oil price, which is below $70 per barrel, is a cause for concern among global oil producers. For some, this price level falls below their break-even point when factoring in production costs, profits, and shareholder dividends. Oil prices will undoubtedly return to previous levels, but this requires a rebound in global trade and strict discipline and full compliance with production quotas by OPEC+.
By Kamel Al-Harami, Independent Oil Analyst
email: [email protected]
