OPEC+ to raise oil production from April, citing 'healthy market fundamentals'

Eight OPEC+ countries implementing a combined 2.2 million b/d of voluntary crude production cuts will gradually ease them from April as planned, the OPEC secretariat said March 3, ending weeks of market speculation over whether the group saw the global economy on firm enough footing to add more oil supplies.

In a statement, OPEC cited "healthy market fundamentals and the positive market outlook" after ministers from the eight countries -- Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Algeria, Kazakhstan and Oman -- held a virtual meeting.

Despite the cut taper being planned, some market participants had expected the group to postpone it for a fourth time, with Dated Brent in the low $70s/b. The decision follows numerous requests by US President Donald Trump to boost crude output to bring down oil prices, and amid fears of tariffs and sanctions from the US administration that could impact the oil market.

"This gradual increase may be paused or reversed subject to market conditions. This flexibility will allow the group to continue to support oil market stability," the OPEC statement said.

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Plans also include a gradual 300,000 b/d quota increase for the UAE, which has recently produced above its OPEC+ target. This will be phased in between April 2025 and the end of September 2026.

OPEC sources conceded that the move represented a gamble on the tightness of the crude market.

One delegate even said "this is not a good time" to bring barrels back to market.

OPEC has been more bullish than other forecasters, such as the International Energy Agency, on crude demand in 2025. One delegate hinted that it was driven by some countries' demands to boost output after months of curbs, which have threatened members' market share.

Recent cuts have swelled spare production capacity in the Gulf to over 6 million b/d.

National oil companies from the OPEC+ alliance's core Middle East members are set to issue their official selling prices for April cargoes in the coming days and inform term customers of their allocations, which would be largely dependent on the OPEC+ decision on production levels.

The release of more OPEC+ barrels could further cool off key Middle East sour crude benchmark Platts Dubai, which has already tumbled more than 15% from a late January peak to $73.25/b on March 3, on heavy refinery maintenance in Asia. Traders also expect China to increase its imports of Venezuelan crude following the US decision to tighten sanctions on Caracas, providing competition for Middle East barrels.

Compensation continues

In addition to the taper plans, OPEC said that overproducers will submit revised compensation plans to the OPEC secretariat by March 17 and confirmed their intention to fully compensate for pumping above quota by June 2026, the statement said.

"The countries with overproduced volumes have also agreed to frontload their compensation plans, so that more of the overproduced volumes are compensated in the earlier months of the compensation period," OPEC said.

Iraq, the UAE, and Kazakhstan, among others, overproduced their quotas in 2024, reducing the group's ability to shore up the crude market.