{"id":108307,"date":"2026-05-04T00:00:00","date_gmt":"2026-05-04T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/?p=108307"},"modified":"2026-05-04T03:30:31","modified_gmt":"2026-05-04T03:30:31","slug":"opec-raises-june-output-as-the-cartels-old-order-quietly-unravels","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2026\/05\/04\/opec-raises-june-output-as-the-cartels-old-order-quietly-unravels\/","title":{"rendered":"Opec+ raises June output as the cartel\u2019s old order quietly unravels"},"content":{"rendered":"<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">  <strong>Seven down, one out:<\/strong> Seven Opec+ producers agreed yesterday to increase production by 188k bbl \/ d in June 2026, <a target=\"_blank\" href=\"https:\/\/www.opec.org\/pr-detail\/1779602-3-may-2026.html\" style=\"\"><\/a> according to an Opec <a target=\"_blank\" href=\"https:\/\/www.opec.org\/pr-detail\/1779602-3-may-2026.html\" style=\"\">statement<\/a>. The decision was agreed upon by Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman during a virtual meeting on 3 May.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>A UAE-sized hole in the math:<\/strong> The 188k bbl \/ d increase is a step down from <a target=\"_blank\" href=\"https:\/\/enterpriseam.com\/ksa\/2026\/04\/06\/opec-boosts-output-for-may\/\" style=\"\"><\/a><a target=\"_blank\" href=\"https:\/\/enterpriseam.com\/ksa\/2026\/04\/06\/opec-boosts-output-for-may\/\" style=\"\">May\u2019s 206k bbl \/ d<\/a><a target=\"_blank\" href=\"https:\/\/enterpriseam.com\/ksa\/2026\/04\/06\/opec-boosts-output-for-may\/\" style=\"\">hike<\/a> \u2014 and the gap likely reflects the alliance\u2019s new arithmetic after the <a target=\"_blank\" href=\"https:\/\/enterpriseam.com\/logistics\/2026\/04\/29\/uae-exits-opec-to-prioritize-capacity-over-quotas\/\" style=\"\"><\/a><a target=\"_blank\" href=\"https:\/\/enterpriseam.com\/logistics\/2026\/04\/29\/uae-exits-opec-to-prioritize-capacity-over-quotas\/\" style=\"\">UAE formally exited Opec and Opec+<\/a> on 1 May. Strip Abu Dhabi's barrels out of the unwinding schedule and the remaining seven are effectively maintaining the same pace, just with fewer hands on deck.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Paper barrels for now:<\/strong> The hike could remain largely <a target=\"_blank\" href=\"https:\/\/www.reuters.com\/business\/energy\/opec-set-agree-third-oil-output-quota-hike-since-hormuz-closure-sources-say-2026-05-03\/\" style=\"\"><\/a><a target=\"_blank\" href=\"https:\/\/www.reuters.com\/business\/energy\/opec-set-agree-third-oil-output-quota-hike-since-hormuz-closure-sources-say-2026-05-03\/\" style=\"\">symbolic<\/a> in the near term, with disruptions to shipping through the Strait of Hormuz constraining exports. Producers may be able to raise quotas on paper, but actually getting those barrels to market is another story.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Proceeding with caution:<\/strong> The group stressed it will retain \u201cfull flexibility\u201d to pause or reverse the phaseout depending on market conditions, including walking back previously implemented adjustments from November 2023.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\">The bigger picture: An old order on its way out<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The UAE\u2019s departure isn\u2019t really a rupture, just a loud signal of a slow structural <\/strong><strong>breakdown that\u2019s been years in the making.<\/strong> The Saudi-led <a target=\"_blank\" href=\"https:\/\/www.sciencedirect.com\/science\/article\/pii\/S0140988317304012#s0155\" style=\"\">\u201cdominant firm\u201d<\/a> model that gave Opec its pricing power from 1973 to about 2014 \u2014 where Riyadh steered prices by flexing spare capacity against a passive non-Opec fringe \u2014 is gone. What\u2019s replacing it is genuinely unsettled, and it matters for every oil-importing economy in the region.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The cracks were already there:<\/strong> US shale broke the <a target=\"_blank\" href=\"https:\/\/www.imf.org\/en\/publications\/wp\/issues\/2016\/12\/31\/an-analysis-of-opecs-strategic-actions-us-shale-growth-and-the-2014-oil-price-crash-44064\" style=\"\">fringe assumption<\/a> in 2014, making non-Opec supply far more elastic than the dominant firm model required. Saudi\u2019s 2014 decision to abandon the swing producer role was a tacit admission that defending high prices was just funding shale\u2019s expansion. The 2016 Opec+ pivot \u2014 when Opec and 11 non-Opec members signed the Vienna Declaration of Cooperation to formalize Opec+ \u2014 effectively turned oil-price management from a Saudi-led project into a <a target=\"_blank\" href=\"https:\/\/www.eia.gov\/todayinenergy\/detail.php?id=61102\" style=\"\">Saudi-Russia coordination problem<\/a>. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>From there, the structure kept shedding pieces<\/strong> \u2014 Qatar walked in 2019, Ecuador in 2020, and Angola in 2024 \u2014 each citing some version of the same baseline-versus-capacity grievance, with chronic \u201ccheating\u201d by Iraq, Russia, and Kazakhstan running in the background throughout.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The UAE\u2019s exit was a long time coming:<\/strong> Quota tensions had been building for years. The 2021 baseline dispute \u2014 when Abu Dhabi blocked an Opec+ agreement because its 3.17 mn bbl \/ d baseline no longer matched its 4+ mn bbl \/ d capacity \u2014 got papered over rather than resolved. The mismatch only widened from there. <a target=\"_blank\" href=\"https:\/\/x.com\/JoumannaTV\/status\/2049367783516033280\" style=\"\">As Bloomberg\u2019s Ziad Daoud has noted<\/a>, last year\u2019s average oil price of USD 67 per barrel meant the UAE recorded a budget surplus of nearly 5% of GDP, while Saudi Arabia faced a 5% deficit. Different fiscal realities, different incentives.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\"> So, what are we left with now?<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Essentially three large strategic producers (Saudi Arabia, Russia, UAE) with a total <\/strong><strong>sustainable production capacity between them of around 27-28 mn bbl \/ d.<\/strong> They each have different fiscal breakevens, different capacity trajectories, different geopolitical ambitions, and different posturing toward Washington \u2014 Russia is ambivalent at best, and Saudi Arabia and the UAE competing directly for attention, influence, and investment. We also still have a US shale fringe that is structurally elastic in a way the original model never assumed. Plus Iraqi, Iranian, and Libyan production that remain in theory viable, but currently volatile for political reasons rather than commercial ones. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>In a nutshell:<\/strong> Three distinct groups, no direct organization, and a complete mess.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>This is, formally, closer to a three-player coordination problem with imperfect monitoring<\/strong><strong> and divergent payoffs.<\/strong> The economics literature on three-player tacit collusion is as unkind as it is complicated, and stable coordination there is harder by a non-trivial margin. As Hamzeh Al Gaaod put it in his note that <a target=\"_blank\" href=\"https:\/\/ent.news\/2026\/4\/1459.pdf?utm_source=enterpriseammenaplus.beehiiv.com&utm_medium=newsletter&utm_campaign=enterpriseam-mena-2026-04-29-007-wednesday&_bhlid=7ad4b133e67062f26987102059ad96d664fb6107\" style=\"\">we shared on Wednesday<\/a>, the exit signals \u201ca decisive shift toward an independent, state-driven oil strategy.\u201d Cheating, in cartel terms, is now done by more players \u2014 and who are no longer in the room.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\">Why this matters<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">The oil price floor is probably weakened severely and permanently. For the next 12-18 months, that reality will be masked by the Strait of Hormuz blockade and lingering production disruptions keeping prices elevated regardless of structure. After that is where the picture changes materially.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Riyadh's choice gets harder:<\/strong> If Saudi Arabia tries to defend prices through deeper unilateral cuts, those cuts could fail faster than they used to. If it accepts a lower realized price and goes for higher market share, the price band stabilizes lower \u2014 and that wouldn't bode well for Vision 2030's expansionary fiscal stance. Saudi fiscal breakeven commentary has been creeping toward USD 100 \/ bbl as spending accelerates, and the marginal cost of defending that level has probably just gone up.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The pain wouldn't stay in the Gulf:<\/strong> A sustained oil price collapse poses risks to Egyptian, Jordanian, Pakistani, and Indian fiscal positions through three channels at once: GCC remittances; FDI and project finance from Gulf sovereigns (the largest single source of new capital into Egypt over the past three years); and goods trade and transit revenues \u2014 including Suez Canal receipts. The medium-term external risk for the region's oil importers may no longer be a sustained price spike. Oddly enough, it could be a sustained price collapse that softens the Gulf's capacity to underwrite everyone downstream.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\">What we're watching<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">Producers will continue meeting monthly, with the next one scheduled for 7 June. Beyond the headline output numbers, look at the language on quota discipline and the tone toward Russia. Watch for any noises about countries being readmitted or added.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The UAE\u2019s stance will also become clearer over the next few weeks and we\u2019ll see if it<\/strong><strong> withdraws from more regional alliances and organizations<\/strong>. In the corporate world, we\u2019ll also keep a close eye on something like Adnoc\u2019s production trajectory: Capacity additions matter more than headline output now. And we\u2019ll continue to watch Saudi fiscal break-even commentary, which has been creeping toward USD 100 \/ bbl as spending accelerates. The marginal cost of defending that level has probably just risen.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Seven down, one out: Seven Opec+ producers agreed yesterday to increase production by 188k bbl \/ d in June 2026, according to an Opec statement. The decision was agreed upon by Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman during a virtual meeting on 3 May. A UAE-sized hole in the math: The 188k [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":108308,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2570],"tags":[2425,10,4696,514],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-108307","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-energy","tag-enterpriseam-ksa","tag-newslead","tag-opec-2","wpautop","entry"],"acf":{"mongo_id":"b78a56c7-374a-4fb8-9b17-9995c3e49ea6","order":"3","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2026\/5\/123.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Opec+ nudges output higher","related_issue":[108302],"teaser":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Opec+ raises June output as the cartel\u2019s old order quietly unravels - KSA<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterpriseam.com\/ksa\/2026\/05\/04\/opec-raises-june-output-as-the-cartels-old-order-quietly-unravels\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Opec+ raises June output as the cartel\u2019s old order quietly unravels\" \/>\n<meta property=\"og:description\" content=\"Seven down, one out: Seven Opec+ producers agreed yesterday to increase production by 188k bbl \/ d in June 2026, according to an Opec statement. 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