Eight members of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) have agreed to gradually unwind their voluntary crude oil production cuts starting in April 2025. Saudi Arabia, Russia, Iraq, Kuwait, the United Arab Emirates (UAE), Algeria, Kazakhstan and Oman will reverse a collective reduction of 2.2 million barrels per day (mbl/d) over an 18-month period, concluding in September 2026.

As part of the agreement, the UAE will also benefit from a 300,000 barrels per day (kb/d) increase in its production target across the same period.

Under the proposed schedule, the combined production targets for the eight countries will rise by an average of 137 kb/d per month. This equates to a 10.5% increase relative to the group’s agreed levels at the 38th OPEC and non-OPEC Ministerial Meeting (ONOMM), with Saudi Arabia and the UAE set for larger increases of 16% and 20%, respectively.

OPEC+ stated that the decision reflects “healthy market fundamentals and the positive market outlook,” while emphasising that any return of curtailed production would remain “gradual and flexible” and “adaptable to evolving conditions.”

The latest plan marks a shift in policy after a series of significant output reductions. Since late 2022, OPEC+ has implemented deep production cuts, including a voluntary 2.2 mbl/d reduction agreed in November 2023 for the first quarter of 2024. These cuts were subsequently extended through to the end of 2024 and further to March 2025.

Surprise move

Last week, JPMorgan had flagged a likely delay in any policy change until April, forecasting that “the alliance will be unable to restore any of the production cuts this year and in 2026.”

Adding supply to an already saturated market is generally viewed as a bearish signal for oil prices. Brent crude, the global benchmark, has declined 21.27% from its April 2024 high, recently trading around US$71.35 per barrel.

A combination of sluggish demand in China and rising output from non-OPEC producers has complicated efforts by the cartel to lift prices. Despite these challenges, production curbs were widely expected to remain in place, given that crude revenue is a primary economic driver for many OPEC members.

The cartel had previously hinted at maintaining cuts. Following calls from United States President Donald Trump for OPEC to help lower oil prices, Saudi Arabian officials reportedly signalled to the White House their reluctance to increase output.

However, geopolitical factors may have influenced the latest developments. Trump has issued an executive order to apply “maximum pressure on Iran,” including an effort to reduce the country’s oil exports to zero. This strategy could open a supply gap that OPEC+ members might be positioned to fill.

At the same time, the alliance may be seeking to defend market share. Bank of America noted that non-OPEC producers have been gaining ground and were expected to account for 70% of global oil market share in the first quarter.