Soaring Saudi crude output drives 180,000 b/d May OPEC+ boost: Platts survey

OPEC+ crude production surged to 41.19 million b/d in May as Saudi Arabia took the opportunity of accelerated quota hikes to pump an extra 170,000 b/d to meet domestic demand, the Platts OPEC+ Survey from S&P Global Commodity Insights showed June 10.

Iraq, which has come under intense pressure to rein in overproduction in recent months, trimmed output by 50,000 b/d to 4 million b/d on lower exports, while fellow laggard Kazakhstan remains 274,000 b/d over quota after a marginal decrease, the survey found.

The OPEC+ alliance had signaled it would ramp up output in May as a group of eight producers implementing 2.2 million b/d of voluntary production cuts appeared to shift strategy to prioritizing market share in the second quarter.

The countries -- Saudi Arabia, Russia, Algeria, Oman, Kazakhstan, Iraq, the UAE and Kuwait -- agreed to increase their collective quotas by 411,000 b/d in May, June and July.

However, only de facto leader Saudi Arabia and the UAE followed through, the survey found, with the latter boosting production by 30,000 b/d to 3.06 million b/d.

The increase takes the kingdom's production to 9.14 million b/d, the highest since its unilateral 1 million b/d production cut in June 2023 dubbed a "lollipop" for the market. The additional crude was used domestically amid soaring temperatures and preparations for Hajj.

While Iraq trimmed output, Russia, Kuwait and Oman held it flat despite the quota increase, the survey found, in a bid to boost compliance. As a result, OPEC+ countries with quotas underproduced their collective targets by 28,000 b/d in May, compared with overproduction of 171,000 b/d in April and 319,000 b/d in March.

That is despite Kazakhstan pumping 1.76 million b/d, down just 10,000 b/d month over month, amid a standoff with international oil companies over the earlier-than-expected expansion of its giant Tengiz oil field.

Quota non-compliance by some countries has dented the impact of production cuts in recent months, making it a source of tension within the group.

In addition to quotas, all of the voluntary cutters apart from Algeria have committed to implementing compensation cuts to make up for excess production. According to the last schedule made available by the OPEC secretariat in Vienna, compensation cuts were due to total 378,000 b/d in May, borne mainly by Iraq and Kazakhstan.

In all, OPEC output rose 160,000 b/d month over month to 27.02 million b/d in May, while its non-OPEC allies pumped 14.17 million b/d, up 20,000 b/d from April volumes, taking OPEC+ production to 41.19 million b/d, a 180,000 b/d monthly increase.

Libya, which is not subject to quotas, pumped at a 12-year high of 1.23 million b/d in May, having recovered from a weeks-long shutdown in late 2024 and despite rising political tensions, while Nigeria exceeded its quota for the first time since it was reduced by OPEC in 2024.

Summer strategy

OPEC has said that healthy market fundamentals led the group to accelerate plans to unwind the 2.2 million b/d of voluntary production cuts in May, June and July, despite blanket US tariffs prompting demand fears and volatility. The wider group continues to hold a further 3.6 million b/d off the market.

The move fueled speculation that the group had traded a price defense strategy for a market share approach. It also came amid requests from the Trump administration in the US for more oil to bring down prices and potential US sanctions on Venezuela and Iran.

Oil prices have risen in recent weeks, with Platts-assessed Dated Brent at $68.85/b on June 9, up from $63.83/b after the eight voluntary cutters last met to agree output levels for July.

However, while analysts from Commodity Insights see seasonal summer demand initially obscuring the impact of additional OPEC+ barrels coming to market, they expect supply growth to outstrip demand toward year-end, potentially driving Dated Brent prices below $50/b.

Voluntary cutters will next meet July 6 to discuss August production levels.

The Platts survey measures wellhead production and is compiled using information from oil industry officials, traders and analysts, as well as by reviewing proprietary shipping, satellite and inventory data.