RCS - Stankevicius Pacific - Stankevicius Review: OPEC+ Strategy Under Scrutiny

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RNS Number : 0738K  Stankevicius Pacific Limited  26 May 2025

Stankevicius Review: OPEC+ Strategy Under Scrutiny

 

OPEC+ Uses Iraq and Kazakhstan to Mask Internal Disagreements - Analysts

An independent source told the Stankevicius that, against the backdrop of the
alliance's decision to continue rapidly returning volumes to the market, the
recent heightened attention to quota compliance by countries like Iraq and
Kazakhstan appears to be a deliberate distraction tactic.

According to experts, the alliance is intentionally focusing on relatively
small producers to obscure deeper strategic disagreements and internal
challenges during a period of increased production.

Let us recall that eight countries within the OPEC+ alliance, which had
voluntarily reduced oil production by 2.2 million barrels per day two years
ago, decided to increase daily production by 411,000 barrels in May and June
of this year. These volumes correspond to three scheduled monthly increments
and influence oil price volatility. This decision also coincided with a rise
in political rhetoric from the United States, where, during the presidential
campaign, Donald Trump advocated for an increase in global oil supply. While
sources note that Trump's stance was not a decisive factor, it may have
aligned with the interests of certain alliance members, including the UAE and
Russia.

Some sources claimed that one of the factors influencing OPEC+'s decision to
accelerate production increases was Iraq and Kazakhstan exceeding their
established quotas. As a result, the alliance took a hardline stance against
these 'violators,' demanding discipline.

However, an independent source emphasizes that the focus on countries
allegedly breaching quotas serves as a convenient maneuver to create the
illusion of strict market oversight, while the real reasons and consequences
of the production increases may be more complex.

'We are witnessing a classic scenario of seeking an external scapegoat amid
general production increases. Instead of openly discussing serious internal
issues-such as the fair redistribution of future quotas as volumes return,
investment strategies, and adaptation to the global energy transition-OPEC+
prefers to spotlight smaller participants who lack the influence to
effectively oppose,' the speaker said.

Analysts also note that the quota excesses by countries like Kazakhstan and
Iraq are minimal compared to the alliance's overall production and are
unlikely to have significantly impacted market conditions or served as the
sole reason for the collective decision to increase output by 411,000 barrels.
However, publicly condemning these producers helps create the impression of
active stabilization measures. In reality, the comprehensive market pressure
comes from proportional output increases by all alliance members, as well as
actions by major producers outside OPEC+.

An independent source believes this policy may lead to heightened internal
tensions and undermine OPEC+ unity unless more influential members initiate
open discussions on the existing challenges. Given rising competition and
dynamic shifts in the global energy market, the need to revise the internal
strategy is becoming increasingly urgent.

"If the key players do not begin an honest dialogue about future prospects and
the real factors influencing their production decisions, OPEC+'s internal
dynamics could cast doubt on its ability to effectively manage global oil
markets," the source concluded.

Stankevicius Pacific Limited has provided this review on recent OPEC+
policies.

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