Surprise: Saudi anger at Iraq behind OPEC+ decision and falling oil prices
Surprise: Saudi anger at Iraq behind OPEC+ decision and falling oil prices
2025-04-05
Shafaq News/ Reuters revealed on Friday the reasons behind the OPEC+ alliance’s decision to increase production by 411,000 barrels per day in May. This decision pushed oil prices to extend their previous sharp losses, followed by their first sharp decline since 2021.
Reuters quoted three sources in the OPEC+ alliance as saying that “Saudi Arabia’s anger at Iraq, Kazakhstan, and other countries that produce large quantities of oil was the main driver behind the alliance’s shock decision on Thursday to increase production, and indicated that this decision may not be reversed even if crude prices continue to decline .”
According to the agency, Saudi Arabia has been a strong advocate of production controls to balance the market over the past five years, as its budget requires oil prices to remain around $90 per barrel. Thursday’s decision represents a significant departure from these policies .
She added, “Saudi Arabia has been pressuring Kazakhstan and Iraq over the past few months to improve their compliance with the production cuts and has threatened to begin increasing its own oil production if this does not happen.”
However, Kazakhstan has been recording record production rates month after month, with US companies Chevron and Exxon Mobil expanding their output at the country’s main field. Iraq has also been slow to reduce its production, according to Reuters .
In a warning to non-compliant countries, the OPEC+ alliance decided last month to begin increasing monthly production by approximately 130,000 barrels per day starting in April, contrary to market expectations that production rates would remain unchanged .
But with non-compliance increasing over the past month, Saudi Arabia surprised everyone and pressured the OPEC+ alliance to increase production by 411,000 barrels per day in May, three times more than expected and representing about 0.4 percent of global supply .
Oil prices plunged 8% on Friday to below $65 a barrel, their lowest level since the height of the COVID-19 pandemic in 2021, due to US tariffs, China’s retaliation, and OPEC+’s decision to accelerate production increases.
shafaq.com
