Kazakhstan's public defiance of the OPEC+ oil production alliance could signal its exit from the group and push Saudi Arabia into a painful price war at a precarious moment.
The Central Asian country's newly appointed Energy Minister Erlan Akkenzhenov told Reuters on Wednesday that Kazakhstan will prioritise national interests over those of the OPEC+ group when determining its oil production levels, implying the country might not comply with cuts it agreed to as part of a supply deal between major producing nations.
This could also be a precursor to Kazakhstan leaving the OPEC+ alliance unofficially led by Saudi Arabia, which has since 2022 agreed on a series of collective production cuts totaling around 5.85 million barrels per day (bpd), or nearly 6% of global production. But the agreement has been far from water-tight, as a number of members have failed to comply with their production targets, including Iraq and the United Arab Emirates.
Kazakhstan has arguably been the worst offender recently. Its crude oil production surged in March to 1.85 million bpd from an average of 1.74 million bpd in 2024, after production began at the extension of the country’s giant Tengiz field at the start of the year, far exceeding the country’s output quota of 1.468 million bpd, according to OPEC data.
The OPEC+ alliance has been highly effective in maintaining Brent oil prices in a steady range of $70 to $90 a barrel in recent years. But the lack of compliance among OPEC+ members has rankled Saudi Arabia, which requires an oil price of over $90 a barrel in order to balance its budget, according to IMF estimates.
Riyadh and other producers sent a shot across the bows of non-compliant members earlier this month when they announced an unexpected deal to accelerate plans to increase output by 411,000 bpd in May, a three-fold increase from a previous plan. Saudi also sharply cut its oil selling prices for May for Asian buyers to the lowest in four months, further challenging other producers.
An extended price war, such as the one Saudi launched in 2014 in an attempt to curb surging U.S. shale production, would make many oilfields unprofitable, leading producers to shut in production, giving low-cost producers bigger market share.
The increased output deal initially appeared to achieve its aim and was followed by a detailed compensation plan, opens new tab that would have seen Kazakhstan and Iraq implement deep production cuts.
But Wednesday's events suggest Kazakhstan is not going to play ball and will maintain production at elevated levels.