Kazakhstan’s oil strategy: Could it spark an OPEC+ exit?

Kazakhstan’s open defiance of OPEC+ production cut commitments is raising questions about whether the country may exit the alliance, potentially triggering a painful price war at a time of global market volatility, according to the Reuters news agency.

Kazakhstan’s Energy Minister Yerlan Akkenzhenov told Reuters on Wednesday, April 23, that the country would prioritize national interests over those of OPEC+ when setting oil production levels. That stance suggests Kazakhstan may not comply with agreed-upon production cuts established by the coalition of major oil producers.

Reuters reported that this shift could be a prelude to Kazakhstan’s departure from the alliance, which is informally led by Saudi Arabia. Since 2022, OPEC+ has aimed to collectively reduce output by about 5.85 million barrels per day (bpd), nearly 6% of global supply. Yet compliance has been spotty, with countries like Iraq and the UAE failing to meet assigned quotas.

«Kazakhstan has arguably been the worst offender recently,» Reuters wrote. «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.»

OPEC+ efforts have generally kept Brent crude prices between $70 and $90 a barrel in recent years. However, uneven compliance has frustrated Saudi Arabia, which, according to the International Monetary Fund, needs prices above $90 a barrel to balance its budget.

Earlier this month, in a move widely interpreted as a warning to non-compliant members, Saudi Arabia and several other producers unexpectedly agreed to raise output by 411,000 bpd in May, a threefold increase from the original target. Saudi Arabia also cut its oil prices for Asian buyers to the lowest in four months, signaling additional pressure on competing suppliers.

A prolonged price war — like the one Riyadh launched in 2014 to rein in the rise of U.S. shale oil — could render many oil fields unprofitable, force production shutdowns and benefit low-cost producers, as Reuters pointed out.

The news agency noted that the increased output deal initially appeared effective. A detailed compensation plan was introduced, under which Kazakhstan and Iraq were expected to sharply reduce production. However, Wednesday’s developments made it clear that Kazakhstan has no intention of backing down and plans to maintain high output, a nightmare scenario for the OPEC+ alliance.

Kazakhstan’s refusal to comply could prompt other member countries to reevaluate the benefits of staying in the agreement, potentially leading to more exits from the deal. That, in turn, could result in a surge in global oil production and a sharp drop in prices, particularly if non-OPEC+ producers such as the U.S. and Brazil ramp up output.

Saudi Arabia and its allies are expected to launch diplomatic efforts to persuade Kazakhstan to return to the agreement. If that fails, they may resort to more aggressive tactics such as flooding the market with cheap oil, effectively igniting a price war.

According to Reuters sources familiar with the matter, several OPEC+ members are preparing to propose another production increase in June. However, releasing large volumes of oil into an already oversupplied market is a risky move, especially amid global economic uncertainty and heightened trade tensions fueled by U.S. President Donald Trump’s policies.

Saudi Arabia and other Gulf states, which enjoy some of the world’s lowest oil production costs, are better positioned to weather a price war. But even they are wary of prolonged low prices, which would strain national budgets.

«The OPEC+ alliance has shown increasing signs of weakness this year. Kazakhstan’s defiance could signal that a split is coming,» Reuters concluded.

Kursiv.media previously reported that Akkenzhenov reaffirmed the Energy Ministry’s full support for expanded production at Kazakhstan’s largest oil field Tengiz, operated by Tengizchevroil.