The Saudi-Russian-dominated OPEC alliance, in an answer to the call of pressure by U.S. President Donald Trump for cheaper fuel prices, indicated last week that it will go ahead with the much-discussed intention of resuming cuts in oil output, which surprised oil traders.
Certain OPEC+ members privately said that group leaders were frustrated with ongoing quota cheating by countries such as Kazakhstan, and that helped drive the decision. Kazakhstan's energy minister, Almassadam Satkaliyev, said on Friday that he asked foreign producers such as Shell and ExxonMobil to cut production last month but that the country has struggled to meet its commitments.
Kazakhstan production increased by 198,000 barrels per day last month to 1.767 million barrels per day, at least 300,000 barrels per day above the OPEC+ quota.Astana has been disregarding this target as it opened new projects, such as development of the super-giant Tengiz field.
The Organisation of the Petroleum Exporting Countries and their supporting partners have been limiting production since late 2022 in an effort to curb oil surplus and sustain oil prices. Their final approval of a series of production increases on March 3 surprised traders, who had expected that weak demand from China and a supply glut in the U.S. would necessitate another pause in production increases.
Following Trump's move, crude futures fell and continued to weaken due to fears that Trump's tariffs would trigger a global trade war. Brent crude once fell to its lowest level since 2021 but has since recovered some losses, trading close to $70 a barrel in London.
OPEC+ stated that it could "pause or revoke" the planned series of production increases depending on market conditions, and there is still nearly a month to consider the next production increase.