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Informist, Friday, May 23, 2025

 

MUMBAI – If Kazakhstan does not reduce crude oil production to the agreed level, then seven other members of the Organization of the Petroleum Exporting Countries and allies are likely to increase output more sharply in the coming months, Carsten Fritsch, commodity analyst at Commerzbank, said in a report Friday. Kazakhstan has produced more crude oil than its quota the past few months and is unlikely to have reduced its production in May.

 

Earlier this month, eight members of OPEC and its allies--Algeria, Iraq, Kuwait, Saudi Arabia, the United Arab Emirates, Kazakhstan, Oman, and Russia--agreed to raise production by 411,000 barrels per day in June, the second consecutive month of aggressive supply hikes. "A similarly strong increase in production in July as in May and June has become very likely," Fritsch said. The original plan of OPEC and its allies was to unwind production cuts totalling 2.2 million barrels per day gradually over 18 months.

 

"In the last two months, the lack of production compliance on the part of individual countries was probably the main reason why Saudi Arabia no longer wanted to bear the main burden of price stabilisation," Fritsch said. With no signs of a revival in demand, this would threaten an even greater supply surplus in the crude oil market this year.

 

Kazakhstan has produced 1.86 million barrels per day of crude oil in the first 19 days of May, Fritsch said, citing a Reuters report. According to the agreement by OPEC and allies, Kazakhstan is expected to produce just 1.49 million barrels per day in May. "This does not include the planned compensatory cuts for the previous overproduction," Fritsch added. "The significant increase in production in recent months is attributed to the Tengiz oil field, which is expected to account for around half of Kazakhstan's oil production in May."

 

Crude oil prices came under pressure at the beginning of April and May due to the significant output increases by OPEC and allies. The cartel will meet Jun. 1 to decide the production level for July. At 1439 IST, the most-active July Brent crude oil contract on the Intercontinental Exchange was 0.8% lower at $63.95 per barrel and the most-active West Texas Intermediate crude oil contract on NYMEX was 0.8% lower ar $60.74 per barrel.  End

 

US$1 = INR 85.19

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Ashutosh Pati

Edited by Rajeev Pai

 

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