OPEC+ Non-compliance Threatens Crude Prices and Coalition Relations

OPEC+ Non-compliance Threatens Crude Prices and Coalition Relations

Iskander Dostoyevsky
1 min read

OPEC+ Non-compliance Threatens Crude Prices and Coalition Relations

OPEC+ faces challenges as Iraq and Kazakhstan overproduce by 195,000 and 43,000 barrels per day respectively, jeopardizing production cuts. The compensation mechanism, instituted in 2020, is under scrutiny due to historical non-compliance and skepticism over enforcement. The resulting market volatility risks crude oil prices near $87 a barrel, demanding concrete actions for restoration.

Key Takeaways

  • OPEC+ members, notably Iraq and Kazakhstan, struggle to adhere to agreed production cuts.
  • The compensation mechanism's effectiveness is doubted, impacting market stability and coalition credibility.
  • Non-compliance intensifies market volatility and strains diplomatic relations within OPEC+.
  • The credibility of OPEC+'s compensation mechanism is under scrutiny due to historical non-compliance issues.
  • Market analysts and traders require evidence of effective enforcement to restore confidence.


Iraq and Kazakhstan's non-compliance exacerbates market volatility, straining both OPEC+ credibility and coalition relations. Revenue risks and strained coalition relations are evident for key players Saudi Arabia and Russia. Long-term, enforcement of cuts is vital for market stability, impacting financial instruments tied to oil and economies reliant on oil exports.

Did You Know?

  • OPEC+ Compensation Mechanism:
    • Explanation: The mechanism aims to ensure member countries adhere to production cuts for global oil market stability.
    • Effectiveness: Historical non-compliance, especially by countries like Iraq and Kazakhstan, undermines its credibility.
  • Crude Oil Prices and Market Stability:
    • Explanation: Influenced by production levels and geopolitical events, they are critical for global market stability.
    • Impact of Overproduction: Non-compliance threatens market stability and diplomatic relations within OPEC+.
  • Diplomatic Relations within OPEC+:
    • Explanation: Essential for effective production policies.
    • Strain from Non-Compliance: Non-adherence by countries like Iraq and Kazakhstan strains diplomatic relations.

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