Onome Amuge
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are facing growing doubts over their ability to push ahead with promised production hikes, as most members outside Saudi Arabia and the United Arab Emirates confront dwindling spare capacity.
The development is likely to reshape the oil market outlook for the rest of 2025. Instead of the feared glut that analysts had warned might depress prices below $60 per barrel, there are rising perceptions that constrained supply may help keep Brent crude in the mid-to-high $60s, providing some relief to producers already facing volatile demand and geopolitical risks.
Since April, OPEC+ has been gradually reversing the 1.65 million barrels per day (bpd) cuts it agreed in 2023. But new data show the group has been able to deliver only about 75 per cent of promised increases. Between April and August, output ran 500,000 bpd short of the 1.92 million bpd nominal increase.
The shortfall reflects both structural and circumstantial constraints. Iraq, the group’s second-largest producer, has been forced to restrain output as it compensates for years of overproduction. Russia, meanwhile, is struggling with repeated Ukrainian drone strikes that have hit export terminals and pipeline networks, threatening to push its production lower rather than higher.
Other members such as Algeria, Kazakhstan and Oman are producing close to their limits. That leaves Saudi Arabia and the UAE as the only OPEC+ members with meaningful spare capacity, indicating how concentrated production flexibility has become within the group.
“Headline increases from OPEC+ are becoming increasingly notional. What the market gets in reality is much less than what’s written in communiqués,” said one trader with a European oil major.
For global oil markets, the shortfall offers an unexpected reprieve. Analysts had forecast a looming oversupply into late 2025 and early 2026, particularly as slowing growth in China and weak industrial activity in Europe weighed on demand forecasts. But if OPEC+ output continues to underperform, the scale of the surplus will be limited, some analysts argue.
Brent crude futures have held around $68–$69 per barrel in recent weeks, defying expectations of a sharp slide. US West Texas Intermediate (WTI) has hovered just below $65. Analysts say the mismatch between pledged and actual supply is helping to stabilise prices despite the broader economic headwinds.
“This is a reminder that OPEC+ is not a monolith. Capacity constraints mean that even if the group agrees on big hikes, the barrels simply don’t materialise. That changes the supply-demand calculus,” said Amrita Sen, director of research at Energy Aspects.
As it stands, Saudi Arabia and the UAE face growing pressure to shoulder a disproportionate share of output increases. Both countries have invested heavily in upstream capacity, enabling them to act as swing producers. But they are also wary of flooding the market and depressing prices, especially with large state budgets still reliant on hydrocarbon revenues.
In early September, OPEC announced that eight producers including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman, would return 137,000 bpd of the 2023 cuts in October, citing steady global economic outlook and healthy fundamentals.
Saudi Arabia, the de facto leader of OPEC, has made clear it wants Brent prices to remain above $65 to support both fiscal stability and ongoing diversification efforts under Vision 2030.
On the other hand, Russia’s position within OPEC+ is particularly precarious. Already straining under Western sanctions, Moscow has relied on discounted exports to India and China to keep revenues flowing. But sustained drone attacks on Black Sea ports and infrastructure have disrupted shipments, limiting its ability to hit production targets.
“Russia’s capacity ceiling has been exposed. Even if they wanted to add more barrels, logistics and infrastructure damage are proving a binding constraint,” said a Moscow-based energy consultant.
This dynamic has further tilted power within OPEC+ towards the Gulf states, particularly Saudi Arabia and the UAE, which now hold the majority of effective spare capacity.
While OPEC+ supply limits are easing immediate oversupply concerns, the demand outlook remains fragile. China’s post-pandemic recovery has been uneven, with industrial output and construction weaker than expected. Europe continues to face sluggish growth, while the US faces questions about the resilience of consumer demand.
The International Energy Agency (IEA) projects global demand growth of one million bpd in 2025, down from stronger gains in 2023 and 2024. Against that backdrop, OPEC+’s inability to deliver large supply increases may prove fortuitous, helping to balance the market.
“The irony is that OPEC+ underperformance is supporting prices just when demand growth is losing steam,” said Helima Croft, head of commodities strategy at RBC Capital Markets.
The limited spare capacity of most OPEC+ members highlights a structural vulnerability for the group. Years of underinvestment, political instability and technical challenges have left many producers unable to raise output significantly even when prices encourage them to do so.
That raises questions about the cartel’s future effectiveness as a supply manager. If only two countries hold meaningful spare capacity, collective decisions risk being overshadowed by Saudi and Emirati interests. Smaller members, unable to respond to market dynamics, could find their influence diminished.
For consuming countries, the situation reflects the importance of diversification. With OPEC+ constrained, non-OPEC supply, particularly from US shale producers and emerging African exporters including Nigeria, may play a larger role in balancing the market. However, US shale growth has slowed as investors demand profitability over expansion.
Outlook
For now, the oil market is watching whether OPEC+ can sustain even its modest October increase. Analysts warn that Iraq’s compensation cuts and Russia’s logistical setbacks could limit actual gains to less than half of the planned 137,000 bpd. If so, Brent may hold steady in the $65–$70 range, providing a floor for producers but easing consumer fears of runaway fuel costs.
“The market is currently being spared a glut. But the flip side is that OPEC+ is running out of firepower. The cushion that used to stabilise prices in both directions is thinner than ever,” said Sen of Energy Aspects.
As the cartel heads into the final quarter of 2025, the question for both producers and consumers is whether OPEC+ has entered a new era of constrained influence; one where promises of supply adjustments matter less than the hard limits of geology, infrastructure and politics.
