OPEC holds view that demand is not a concern, despite claims by Kazakhstan to lead the jump in OPEC+ production
OPEC announced on Wednesday that Kazakhstan was the country responsible for a significant increase in crude production in February by the wider OPEC+ group. This highlights a challenge facing the producer group to enforce adherence of agreed output targets.
The Organization of the Petroleum Exporting Countries (OPEC) reported that OPEC+ - which includes OPEC, Russia, and other allies - increased its output in February by 363,000 barrels a day, to 41,01 million bpd. Kazakhstan was the leading producer.
This is more than double the 138,000 bpd increase in OPEC+ production that was scheduled to begin in April, as the group gradually ends its last layer of cuts. Oil prices have been pushed down by the plan to increase production and concerns about trade tariffs.
Kazakhstan, the world’s largest landlocked nation, is producing at a record-high level, well above the OPEC+ quota. This is due to the expansion of production at Tengiz, the country’s largest oilfield.
According to OPEC's data, which is compiled from secondary sources and derived from secondary sources, Kazakhstan produced 1.767 millions bpd crude oil in February. This was up from 1.570million bpd for January. Kazakhstan's OPEC+ quota for February is 1.468 millions bpd.
The OPEC data showed that some other OPEC+ countries such as the United Arab Emirates (UAE), Nigeria, and Gabon were also pumping more than their quotas but in much smaller amounts.
Sources in the industry said that OPEC+ decided to raise prices for April because of the record production from Kazakhstan. Kazakh officials pledged, at a Friday briefing, to reduce output in March April and May.
Brent crude maintained its gains and traded above $70 a barrel after the OPEC release.
DEMAND OUTLOOK STEADY
OPEC also kept its forecasts on the growth of world oil demand constant in its report.
OPEC estimates that the world's oil demand will increase by 1,45 million bpd by 2025, and by 1,43 million bpd by 2026. Both forecasts were unchanged since last month.
OPEC stated in the report that it expects the global economy to accept new trade policies with ease. The increased tariffs by President Donald Trump on all U.S. imports of steel and aluminum took effect on Tuesday, intensifying a campaign to reorder the global trade system in favor of the U.S.
As trade policies continue being revealed, it is expected that they will contribute to the volatility. OPEC's report stated that the global economy will adjust.
OPEC has a relatively high view of oil demand in the industry. Unlike forecasters like the International Energy Agency it does not expect demand to peak.
The IEA estimates that the demand for oil will grow by 1.1 million bpd in 2025, which is less than OPEC. However, the gap between the two groups on 2025 has shrunk significantly compared to 2024, when they reached a high-water mark due to differences about the pace of energy transition. Alex Lawler is the reporter. (Editing by Louise Heavens, Mark Potter and Mark Potter).
(source: Reuters)
