As the end of 2025 approaches, a widening production capacity crisis is fracturing OPEC+, creating a clear split between the ‘haves’ and the ‘have nots’ as the group struggles to meet its rising output targets.
While Iraq, Saudi Arabia and the UAE continue to boost production, all other members of the OPEC-9 appear to have reached their peak capacity, with only a 20,000b/d increase in September compared with the previous month, according to Petroleum Economist estimates.
Since March, the OPEC-9 have added just 100,000b/d to their production, while Iraq, Saudi Arabia and the UAE together increased output by 1.61m b/d. In September, Iraq was able to raise its production by 100,000b/d, while Saudi Arabia and the UAE added 270,000b/d and 100,000b/d, respectively. Even Nigeria is showing the limits of its capability after going beyond its sustainable capacity for a couple of months.
The inability to boost production is even more pronounced among the group's non-OPEC allies under the Declaration of Cooperation (DOC). While Russia is now facing the full impact of drone attacks, there are already doubts about the country’s ability to raise output significantly in the short and medium term. Russian production rose in September by only 50,000b/d, to 9.2m b/d. Even Kazakhstan, which has been increasing output in recent months, shows a drop of 10,000b/d, as its ability to increase production from the present level is limited in the short term. Since March, OPEC+ DOC members of the group have increased their output by around 50,000b/d.
OPEC-9 countries, which continue to ramp up production, are facing two key problems. On the one hand, they are supporting oil prices and giving high-cost non-OPEC producers the opportunity to continue to increase output. Production in the US, Canada, Brazil and Guyana is on the rise, as prices remain supportive for upstream activity in these countries. On the other hand, spare capacity in the Middle East is falling rapidly. While rising output in the Americas is negative for prices, the lack of surplus capacity is positive. This production imbalance has broader implications.
Unwinding the cuts
With approximately 4m b/d of spare capacity, OPEC+ is cautiously unwinding voluntary production cuts. This rapidly diminishing buffer not only increases price volatility but also strips the 'haves' of their key tool for market stability and geopolitical influence. However, the group is continuing to monitor market conditions through regular virtual meetings, balancing supply discipline with strategic flexibility. This year, geopolitical tensions such as Israeli attacks have often led to higher prices, showing the need for surplus capacity in uncertain times. After big increases to the target until September, OPEC+ decided to add a modest 137,000b/d each in October and November.
OPEC+ is closely watching demand signals, non-OPEC production, inventory changes, China’s oil stockpiling and the market structure. They also have investments in social infrastructure in mind, although big producers can ignore these concerns for a short period of time, as sovereign funds help. According to the Middle East Eye, the Saudi Public Investment Fund has more than $1t in assets, although Riyadh expects its budget deficit to hit 5.3% of GDP in 2025. The massive social and economic transformation projects (such as Vision 2030) create an enormous structural need for high oil prices, which directly limits Saudi Arabia's flexibility on output policy
The most important signal for oil producers will be oil prices. With many analysts expecting supply to exceed demand significantly both in Q4 2025 and Q1 2026, oil prices could fall below $60/bl. This will result in mounting pressure from the government and the public to reconsider OPEC+’s production policy. The market is still in backwardation but has flirted with contango a few times recently. The Asian market is relatively strong, while the Brent market has been buoyed by Vitol’s buying. This has helped ease the weakness during the autumn refinery maintenance season. If the weakness persists and winter demand fails to materialise, the first signs of OPEC+’s changing track could appear soon.
OPEC+ will also be looking at inventory buildup. While OECD stock-building is easier to track, non-OECD inventories are gradually becoming more important. China has played a key role in stockpiling, with reports of state oil companies adding around 170m bl of storage across 11 sites during 2025 and 2026. It is not easy to track stockpiling in non-OECD countries. Analysts normally calculate them by adding domestic production and imports and deducting refinery processing rates. It is a well-known fact that China buys oil for its storages when oil prices are not too high. If prices drop significantly, Beijing’s appetite will remain high. And if the market shifts into contango, offshore stocks across the globe will also start increasing.
Although the OPEC+ DOC group looks united at present, low prices have the potential to reduce cohesion. Russia needs high prices to fuel its war machine. Some OPEC members, such as Algeria, Nigeria and even Iraq, need high prices to meet their budgetary requirements. OPEC+ must walk a tightrope in the next few months to keep every member happy—an uphill task given the divergence of priorities among members.
FIG.1: OPEC+ PRODUCTION SURVEY
| Sep 25 | Aug 25 | ||||
| 0.00 | |||||
| 0.00 | |||||
| 58% | |||||
| 99% | |||||
| 0.04 | |||||
| -0.06 | |||||
| 0.27 | 9.98 | ||||
| 100% | |||||
| 0.080 | |||||
| 0.070 | |||||
| Sep 25 | Aug 25 | ||||
| 0.03 | |||||
| Bahrain | |||||
| -0.01 | |||||
| 0.05 | 9.45 | ||||
| 0.00 | |||||
| 0.04 | 13.22 | 102% | |||
| Aug 25 | |||||
| 0.00 |
Source: Petroleum Economist
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