Opec+ issues new plan for oil cuts to compensate for overproduction

OPEC+ on Thursday issued a new schedule for seven member nations to make further oil output cuts to compensate for pumping above agreed levels, which will more than overtake the monthly production hikes the group plans to introduce next month. 

The plan will represent monthly cuts of between 189,000 barrels per day and 435,000 bpd, according to a table on OPEC's web site. The scheduled cuts last until June 2026. 

OPEC+, which includes OPEC plus Russia and other allies, has been cutting output by 5.85 million bpd, equal to about 5.7% of global supply, agreed in a series of steps since 2022 to support the market. 

On March 3, it confirmed that eight of its members including Russia, Saudi Arabia, UAE, Kuwait, Oman, Algeria, Kazakhstan and Iraq would proceed with a monthly increase of 138,000 bpd from April, citing healthier market fundamentals. 

But sources told Reuters that recent, hefty overproduction from Kazakhstan angered other members and was one of the deciding factors that ultimately led the group to proceed with the hike. 

Under the revised plan, Iraq will make the bulk of the contribution to the compensation cuts followed by Kazakhstan and Russia.

The plan also sees Saudi Arabia, one of the main stalwarts of adhering to the OPEC+ deal, making small compensation cuts of 6,000 to 15,000 bpd over a period of three months. 

Kazakhstan has been producing at a record high as U.S. oil major Chevron expands output at the largest Kazakh oilfield, Tengiz.

Recent OPEC data showed that Kazakhstan produced 1.767 million bpd of crude in February, up from 1.570 million bpd in January, compared with an OPEC+ quota of 1.468 million bpd.