The Organization of the Petroleum Exporting Countries (OPEC) announced on Wednesday that it has received updated plans from Iraq, Kazakhstan, and other nations to implement additional oil output cuts. This initiative is part of a compensation strategy aimed at rectifying overproduction that exceeds agreed-upon quotas. OPEC+, which encompasses OPEC and its allies, including Russia, has been managing output reductions since late 2022 to stabilize the oil market. The new plan stipulates that seven countries will need to reduce their output by a combined total of 369,000 barrels per day (bpd) in monthly increments until June 2026.
This marks an increase from a previous plan that spanned from March 2023 to June 2024. The monthly reductions will range between 196,000 bpd and 520,000 bpd, compared to earlier figures of 189,000 bpd to 435,000 bpd. If these cuts are fully realized, they would largely offset a planned increase in output of 411,000 bpd by other OPEC+ members in May, thus providing further support for global oil prices. The nations involved in making these reductions include Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, and Oman.
Notably, Algeria is on the list without any required cuts. In May, six of these countries are expected to reduce their output by a total of 378,000 bpd. Despite the implementation of these cuts, OPEC+ has consistently revised its plans due to some countries failing to meet pledged reductions. Iraq, the largest overproducer in the group, has acknowledged the need to enhance its efforts to comply with the compensation cuts.
As of May, Iraq’s crude allocations to customers are significantly lower, and the need for further reductions has been emphasized by knowledgeable sources. Overall, Iraq must compensate for 1.93 million bpd of overproduction by the deadline, while Kazakhstan must address a deficit of 1.3 million bpd within the same timeframe.