Insights 
VT 
Kazakhstan’s oil production in May likely surpassed its agreed quota, continuing its trend of exceeding the OPEC+ limit. The country’s output, excluding condensates, reached 1.86 million barrels per day in the first 19 days of May, which was 2% higher than April’s figures and closely matched March’s levels. The OPEC+ agreement had set Kazakhstan’s production limit at 1.49 million barrels per day for May.
The Tengiz oil field is largely driving the increased production, expected to constitute about half of Kazakhstan’s total output this month. The Ministry of Energy notes that production at Tengiz field has met its target, causing projections to remain stable for the rest of the year. However, OPEC+, particularly Saudi Arabia, may be unsettled by Kazakhstan’s high production levels.
Potential Boost In Production
There is potential for other OPEC+ countries to follow Kazakhstan’s lead by ramping up their production, especially during the summer months. This development suggests a possible boost in production in July, similar to the high outputs in May and June. The implications of these actions highlight the ongoing dynamics within the OPEC+ coalition regarding production targets.
With Kazakhstan continuing to pump above its agreed ceiling, we’re seeing more than just a localised breach of the OPEC+ pact—it hints at the possibility of a broader response across other producers in the alliance. Tengiz, the driver behind the surplus barrels, has maintained predictable output, allowing Astana to confidently overproduce without facing immediate technical constraints. From our vantage point, this consistency allows them to walk a fine line between fulfilling internal objectives and stretching the limits of OPEC+ cooperation.
Looking at the short-term impact, such excess supply creates a ceiling effect on price recovery, especially as global inventories have not tightened as quickly as expected in early Q2. For market participants whose positions depend on the expected supply discipline from OPEC+, there’s now a mounting case that some of that discipline may weaken if others also begin to disregard quotas. With warm season demand increasing, the strategy from several member states may quietly shift from compliance to balance-sheet buffering, especially if Brent remains comfortably near profitability thresholds.
The Saudis, often seen as the stabilising force, are likely observing this move with a mix of frustration and strategic recalculation. If Riyadh were to respond with a counter-adjustment—such as fine-tuning their exports or selectively flooding specific markets—it could shake short-term volatility and catch those overleveraged on one directional bet off guard. We should prepare accordingly by monitoring their shipping and pricing behaviours in the coming weeks, rather than merely official statements.
Impact On The Futures Curve
On the futures curve, backwardation might begin showing reduced steepness if traders start believing that supply increases are not isolated events. If more OPEC+ members decide to produce freely, there’s clear risk of longer-dated contracts adjusting downward. We should treat calendar spreads cautiously, especially over the three-to-six-month horizon, ensuring they’re not overexposed to any assumption of tight supply.
For exposure through options, implied volatility remains sensitive to producer decisions and current inventory data. It becomes increasingly important to adjust positioning dynamically, especially on days with shipping reports or unexpected field output bulletins. Kazakhstan has already declared intent to hold production near current levels, so unless enforcement begins to tighten or others shift course, we’ll need to assume further pressure on compliance overall.
Watching refinery margins, particularly in Asia where much of this excess crude will likely flow, could offer added signals. If margins begin falling despite seasonally strong throughput, it’s one more data point confirming oversupply. Meanwhile, countries with greater refining capacity could suddenly gain advantage in pricing, affecting arbitrage decisions out of Europe and the US Gulf.
We’d be remiss not to also track producer behaviour beyond OPEC+. If discipline breaks too far within the group, it may embolden others like Brazil or Norway to lean into unconstrained production strategies. This would exacerbate the loosening supply scenario and dilute efforts to support benchmarks through managed output.
Keep eyes on shipping logistics too. The moment longer-term charters start to fill up at higher rates, it’s yet another signal that excess output is finding its way to water. That puts pressure on floating storage, and consequently, affects front-end contract premiums. Any reshuffling in this area might create scalping or short-term arbitrage opportunities for those watching TIC data and port movements carefully.
With the path forward increasingly influenced by targeted moves from individual states, rather than collective restraint, we need to model more scenarios than before. Taking a fluid approach to delta and gamma exposure is advisable, especially as instability now seems as likely to come from those inside the group, not outside.
Stay data-dependent and shift positioning when volume flows confirm narrative changes—because assumptions of unity at this stage appear less durable than before.
