OPEC+ Faces Growing Struggles to Meet Oil Output Targets

OPEC+ has managed to deliver only about three-quarters of its promised oil output increase since April, and analysts warn that number could drop closer to half later this year. The group is hitting production capacity limits, according to industry sources and data.

OPEC+ Shortfall Keeps Oil Prices Supported

The alliance, which accounts for around 50% of global oil supply and includes OPEC members plus Russia, is currently pumping nearly 500,000 barrels per day below its target. This shortfall equals 0.5% of global demand. Instead of creating an oil glut, the gap has helped keep Brent crude prices strong, recently near a seven-week high of $69 per barrel.

Eight members that had voluntarily cut production in April 2023 began restoring output this April. Their plan was to unwind cuts of 2.2 million barrels per day by the end of September and begin lifting another 1.65 million barrels per day in October. The UAE also received approval to increase production by 0.3 million barrels per day between April and September.

Actual Output Still Lags Behind

From April to August, OPEC+ added only 75% of the targeted 1.92 million bpd increase, Reuters data shows. That left production nearly half a million barrels short of the plan. Analysts at Barclays and Kpler said this tightness has supported oil prices, even as futures markets reflect fears of limited supply.

Capacity Limits Hold Back Members

Two main issues explain the shortfall. First, some members, like Kazakhstan and Iraq, had to make extra “compensation cuts” after previously exceeding their quotas. Second, many producers are now close to their maximum capacity after years of underinvestment.

The International Energy Agency (IEA) estimates OPEC+ has 4.1 million bpd of spare capacity, but most of it sits in Saudi Arabia and the UAE. For other members, spare production is extremely limited, making it difficult to hit targets.

Outlook for September and October

OPEC+ aims to raise production by 547,000 bpd in September and another 137,000 bpd in October. Analysts, however, expect the real increases to be only about half of those figures.

Saudi Arabia remains the main driver of gains. In August, it pumped 747,000 bpd more than in March, accounting for most of the group’s cumulative increase. Looking ahead, unused capacity is expected to shrink further. Barclays predicts spare OPEC capacity could drop to 2 million bpd by September 2026.