The eight OPEC+ countries that have been cutting oil production will have to compensate 4.57 million barrels per day (bpd) in overproduction so far, and the compensation plans entail offsetting all above-quota output by June 2026.
Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman have submitted their individual compensation plans to OPEC, the cartel said on Wednesday.
Source: OPEC
Since the very first OPEC+ agreement in 2016, OPEC and its non-OPEC allies have been struggling with overproduction from several members, which has undermined the efficiency of the cuts and has muddled the figures about actual OPEC+ supply to the market.
The latest compensation plans envisage the biggest monthly compensations to be made between May and October 2025, with lower total monthly compensations left for next year.
In theory, this means that the OPEC+ producers will produce lower volumes than planned this year and offset the production 411,000 bpd hike from May 2025.
In practice, OPEC+ hasn’t achieved full conformity with the production cuts as producers such as Iraq, Kazakhstan, and Russia have continuously failed to stick to their quotas.
Just ahead of the production increase beginning in April, the OPEC+ group boosted its oil production to an eight-month high in March, according to the Platts OPEC+ Survey from S&P Global Commodity Insights.
The producers in OPEC+ who have quotas have busted their overall output ceiling by a massive 319,000 bpd, according to the Platts survey.
The continued problems with compliance and higher OPEC+ production in March come as the group begins easing the cuts in April and is set to further hike production in May by three times the expected amount.
Earlier this month, OPEC said that the decision to go ahead with a large production boost in May could also “provide an opportunity for the participating countries to accelerate their compensation.”
By Tsvetana Paraskova for Oilprice.com
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