Kazakhstan's noncompliance with oil production quotas could push Riyadh into price war

Kazakhstan's disregard for OPEC+ agreements on oil production cuts could prompt the country to exit the group. This would worsen the state's relations with the cartel's leader, Saudi Arabia, and could lead to a price war, Reuters experts say.

On Wednesday, Kazakhstan announced its intention to prioritize national interests over the requirements of OPEC+ when making decisions on the level of oil production. According to Reuters analysts, such statements may encourage other countries to reconsider the benefits of complying with the alliance's quotas. This could lead to an increase in global oil output and, consequently, a decrease in market prices.

Reuters suggests that Saudi Arabia and its allies will launch a diplomatic campaign to persuade Kazakhstan to adhere to existing agreements. However, if Riyadh fails, it may try to resolve the issue by flooding the market with even cheaper oil, effectively starting a price war.

The news agency's sources report that several OPEC+ members plan to accelerate oil production increases in June for the second consecutive month.