OPEC+ agrees to second consecutive oil output surge for June

OPEC+ has agreed to a fresh increase in oil output for June, marking the second consecutive month of accelerated supply restoration as the coalition led by Saudi Arabia and Russia pursues a bold strategy aimed at disciplining non-compliant members.

The move, delegates said on May 3, reflects mounting frustration within the group over continued overproduction by countries such as Kazakhstan and Iraq.

According to sources familiar with the matter, who spoke to Bloomberg on condition of anonymity, the alliance will boost production by 411,000 barrels per day next month—replicating the surprise hike announced last month for May. That earlier decision had stunned markets by tripling the planned volume of restored supply and marked a clear departure from OPEC+’s traditional role as a price stabiliser.

Crude traders had anticipated a significant increase, especially after signals from Saudi Arabia suggesting the kingdom was prepared to tolerate an extended period of low oil prices. This shift has triggered concerns over a potential breakdown of OPEC+ cohesion and renewed fears of a price war that could reshape the global energy landscape.

Delegates indicated that the move was driven largely by Riyadh’s determination to “sweat” overproducing countries financially through a price slump. Frustrated by persistent quota violations—especially by Kazakhstan, which exceeded its March target by 422,000 barrels a day—Saudi Arabia has reportedly opted for market pressure as a corrective tool. Iraq has shown some willingness to comply, but the same cannot be said for Kazakhstan, which has made little effort to curb production by international firms such as Chevron and Eni operating within its borders.

“OPEC+ has just thrown a bombshell to the oil market,” said Jorge Leon, an analyst at Rystad Energy A/S and a former official at the OPEC Secretariat. “With this move, Saudi Arabia is aiming to punish non-compliance, especially from Kazakhstan, while also currying favour with President Trump’s demand for lower oil prices.”

The timing of the strategy shift also appears aligned with political calculations. President Trump is scheduled to visit the Middle East later this month and has publicly urged OPEC to reduce fuel prices. Simultaneously, Washington is engaged in tense nuclear negotiations with Iran, a geopolitical rival of Riyadh and a fellow OPEC member.

Oil prices traded near $61 per barrel in London on May 2, hovering close to a four-year low. The Saudi-led production pivot has added to investor unease already inflamed by Trump’s escalating trade dispute with China, the world’s largest oil importer. Even before the OPEC+ supply surge, analysts were warning of a potential surplus in 2025 due to slowing demand from China and robust US production.

Falling prices have put pressure on oil companies globally, including US shale producers, who now struggle to meet the administration’s call for an aggressive increase in domestic output. At the same time, lower revenues are beginning to hurt key OPEC+ members—Saudi Arabia included.

The kingdom has reportedly scaled back investment in high-profile initiatives central to Crown Prince Mohammed bin Salman’s economic diversification plans, such as the ambitious Neom megacity project. The International Monetary Fund recently downgraded the economic outlook for several Middle Eastern nations and estimated that Saudi Arabia requires oil prices above $90 per barrel to balance its budget.

Despite these economic pressures, Riyadh appears committed to its new strategy. Saudi Energy Minister Prince Abdulaziz bin Salman—known for his cautious approach during his five-year tenure—is now embracing a more assertive posture. The current policy recalls the brief oil price war with Russia in 2020, a moment of intense volatility that saw both countries flood the market with crude.

What remains uncertain is Moscow’s stance on the latest Saudi manoeuvre. President Vladimir Putin relies on oil revenues to sustain Russia’s prolonged war in Ukraine. However, warming ties with President Trump may offer Moscow some hope for relief from Western sanctions, which continue to hinder Russian oil exports.

By Tamilla Hasanova