{"id":1539204,"date":"2025-06-01T01:35:00","date_gmt":"2025-06-01T05:35:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1539204"},"modified":"2025-06-01T01:35:00","modified_gmt":"2025-06-01T05:35:00","slug":"opec-hikes-output-for-third-time-by-411kbpd-despite-reservations-from-russia","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/opec-hikes-output-for-third-time-by-411kbpd-despite-reservations-from-russia\/1539204\/","title":{"rendered":"OPEC+ Hikes Output For Third Time By 411Kbpd, Despite Reservations From Russia"},"content":{"rendered":"

OPEC+ Hikes Output For Third Time By 411Kbpd, Despite Reservations From Russia<\/span><\/p>\n

\n

Following days of frenzied speculation that OPEC+ may go so far as to start another global price war similar to the Saudi armada in March 2020 which eventually sent WTI crude prices to a negative $45, however briefly, today’s decision was positively tame: OPEC+ agreed to surge oil output for the third month in a row, despite mounting reservations from key member Russia, doubling down on a historic policy shift that has sent crude prices sinking.<\/p>\n

According to a statement on the OPEC website, the cartel of oil-exporting nations and several hangers on agreed during a video conference on Saturday to add 411,000 barrels a day to the market in July<\/strong>. The hike matches increases scheduled for\u00a0May and June, marking a radical reversal from defending prices to actively driving them lower, largely in response to Kazakhstan chronically and unapologetically breaching its quota.<\/p>\n

\u201cOPEC+ isn\u2019t whispering anymore,\u201d said Jorge Leon, an analyst at Rystad Energy A\/S, who previously worked at the OPEC secretariat. \u201cMay hinted, June spoke clearly, and July came with a megaphone.\u201d<\/p>\n

Officials said the supply hikes reflect Saudi desire to punish over-producing members like Kazakhstan and Iraq, recoup market share lost to US shale drillers and other rivals, and satisfy President\u00a0Donald Trump\u2019s desire for cheaper oil, even if it leads to – well – cheaper oil, and even steeper budget deficits for the country that exports 10 million barrels of oil per day and has an all-in breakeven price around $90.<\/p>\n

The hikes will offer temporary relief to consumers as the northern hemisphere goes into its peak demand season, while also helping central banks grappling with stubborn inflation. Yet the market impact creates financial peril for oil producers around the world, which could be facing a period of prolonged low prices, followed by much higher prices as producing infrastructure suffers from disuse.\u00a0<\/p>\n

What was most notable about this latest production hike is that, according to Bloomberg, several members expressed reservations during Saturday\u2019s meeting about the speed with which OPEC+ was raising production. <\/strong>Russia, Algeria and Oman wanted a pause in the increases, according to delegates.<\/p>\n

The difference in views between Moscow and Riyadh, the cartel\u2019s two most powerful members, will come back into play on July 6, when they meet again to discuss output levels for August.<\/p>\n

In April oil briefly tumbled to a four-year low under $60 a barrel after OPEC+ first unexpectedly announced they would bolster output by triple the scheduled amount. The move came even as faltering demand and Trump\u2019s trade war were already crushing the market.\u00a0 This was followed by a second hike announcement one month later, and now a third one.<\/p>\n

<\/a><\/p>\n

While\u00a0Brent futures\u00a0have since recovered to trade near $64 a barrel, the IMF estimates the Saudis need prices above $90 to cover the lavish spending plans of Crown Prince\u00a0Mohammed bin Salman. The kingdom is contending with a soaring\u00a0budget deficit, and has been forced to cut investment on flagship projects such as the futuristic city, Neom.<\/p>\n

However, thanks to earlier Reuters leaks, the markets is likely to take Saturday\u2019s agreement as positive because ahead of today’s announcement \u201cthere were some concerns of a larger increase,\u201d said Giovanni Staunovo, a commodity analyst at UBS, referring to Reuters reports that OPEC+ was considering even bigger output hikes.<\/p>\n

Meanwhile, if Riyadh\u2019s strategy is to discipline the cartel\u2019s quota cheats through a \u201ccontrolled sweating,\u201d it doesn\u2019t seem to be working. Kazakhstan, the most blatant offender, continues to exceed its limits by several hundred thousand barrels a day and has publicly stated that it has no plans to atone. <\/strong>Energy Minister Yerlan Akkenzhenov told reporters on Thursday that the country can neither enforce cutbacks on international corporate partners, or dial back at state-run fields. Which is why we recently speculated that if one or more of its peers wishes to teach Kazakhstan a painful lesson, then the Caspian Sea pipeline which carries most of Kazakh oil exports courtesy of the Caspian Pipeline Consortium, is probably sweating bullets right now.<\/p>\n

With Kazakhstan chronically abusing its OPEC+ quota, and with 80% of Kazakh oil reaching the world via the CPC pipeline, what are the odds CPC gets Nordstreamed? pic.twitter.com\/xgQ0QGlkMJ<\/a><\/p>\n

\u2014 zerohedge (@zerohedge) May 23, 2025<\/a><\/p>\n

But while Kazakhstan has so far refused to budge, the price downturn is taking a clear toll in America\u2019s shale oil heartlands, where companies like Diamondback Energy Inc. say production has peaked, despite Trump\u2019s promise the country would \u201cdrill, baby, drill\u201d in a new energy boom.<\/p>\n

With the hike scheduled for July, OPEC+ will be just over halfway through a road map for reviving 2.2 million barrels a day of output it had idled in recent years, a process that was previously planned to last until late 2026 yet which depends largely on how much of a stimulus China will finally unleash. The group will decide in the coming months how quickly to restore the remainder of supplies it\u2019s still withholding from the market.<\/p>\n

For some analysts, increasing supply is entirely logical. Demand will rise over the next few months in the US as drivers take to the roads for summer vacations, and also in the Middle East, where peak use of air conditioning means some barrels will be consumed domestically.<\/p>\n

\u201cFundamentals in the right-here, right-now are strong \u2014 inventories are very low,\u201d Amrita Sen, director of research at consultant Energy Aspects Ltd., said in a Bloomberg television interview before the meeting. \u201cIt is a good time for OPEC+ to add barrels to the market, so I don\u2019t see why they wouldn\u2019t.\u201d<\/p>\n

Nonetheless, further price losses may be in store. JPMorgan forecasts that Brent futures will sink into the \u201chigh $50s\u201d later this year as the cartel\u2019s hikes contribute to a global supply glut of more than 2 million barrels a day.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSat, 05\/31\/2025 – 21:35<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/opec-hikes-output-third-time-411kbpd-amid-reservations-russia<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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