Opec+ faces an internal foe in 2025 – Kazakhstan 

OPEC+ faces many enemies in 2025 – weak oil demand growth, rising production from its rivals and the arrival of Donald Trump at the White House chanting “drill, baby, drill”. Those are the external threats. But there are internal foes, too. Every few years, the cartel faces a recurring challenge: One of its members has spent lots of money on new oilfields and is ready, eager, and aching to turn that investment into barrels of crude. In the early 2000s, Algeria was that impatient member wishing to boost output; in the 2010s, it was Iraq. More recently, the United Arab Emirates played the role. Next year, it will be Kazakhstan.

The central Asian nation joined forces with Opec in 2016 when the oil cartel created an alliance with several other big petrostates, with the expanded group dubbed Opec+. For nearly a decade, Kazakhstan has been an uneasy partner for the cartel, more often than not pumping above its quota. The challenge will increase next year when a US$45 billion project to expand the country’s largest oilfield will be ready. If allowed to pump at full throttle, the expansion of the Tengiz oilfield, almost a decade in the making, could produce about 260,000 barrels a day from mid-2025. That may not sound like a lot, but it equals about a quarter of the expected increase in global oil demand next year. The expansion, alongside stronger-than-expected output from existing facilities at the field, would allow Kazakhstan to lift its oil production, including a form of light oil called condensates, to a record above two million barrels a day next year.

Delays to quota increases

The central Asian nation had hoped that by the time the expansion of Tengiz comes onstream, its quota would be somewhat higher, giving it room to boost output without violating the limits too obviously. Back in June, Opec+ approved a plan to slowly increase its quotas through the final months of 2024 and then into 2025. The monthly hikes should have started in September, but falling oil prices prompted delays until January. The cartel is scheduled to meet on Sunday to discuss whether it should pause again. Opec+ delegates tell me another delay is likely, although formal conversations haven’t started yet.