OPEC+ production decisions raise oil market uncertainty

24/05/2025

OPEC+ production decisions raise oil market uncertainty

WITH the upcoming meeting of OPEC+ next month in Vienna, oil markets are anxious about the group’s potential decision to raise production again. This has raised concerns about a further weakening of oil prices, which no one desires, but it is a sign that OPEC+ is worried about the lack of discipline among some of its members.

Nonadherence to agreed production limits is becoming a regular phenomenon. Currently, oil prices hover around $64 a barrel, significantly lower than the $70–$80 range needed to balance many OPEC members’ annual budgets. This has forced several member countries to seek loans from international banks to cover budget deficits. Most oil-producing countries require prices between $90 and over $100 per barrel in the coming years, unless they manage to suppress annual consumption, which is highly unlikely. Reducing electricity consumption must be carefully planned, especially given the current low electricity prices in Kuwait, where consumers pay only 2 fils per kilowatt-hour, while the government’s cost exceeds 10 fils.

This makes electricity one of the cheapest in the region. Despite calls to escalate prices based on individual consumption, which means the more you use, the higher your fair bill the demand remains high. During the summer months, it is necessary to increase oil production to meet electricity needs due to the lack of alternatives to oil. Otherwise, Kuwait would have to import gas, which is more expensive financially but cleaner, requires less maintenance, and is more environmentally friendly.

Until Kuwait discovers large gas reserves, which are still under exploration and have yet to be confirmed, oil will remain the primary energy source. Since the call by the U.S. president to reduce oil prices, this trend has continued, with OPEC+ increasing crude oil production to maintain its market share and prevent other producers from encroaching on it.

The solution for oil-producing countries is to find alternatives to oil, switch to other energy sources, and adapt to discoveries. We can borrow funds and collaborate with neighboring countries on joint energy projects. It is time to seriously consider options and explore alternatives. Oil will remain with us, but investing in cleaner, sustainable energy sources is the right move to stay ahead. We possess the financial resources and borrowing capacity to think proactively, invite international firms to partner with us, and help promote alternatives to oil.

Solar energy, for example, could be a promising alternative. We are a young nation with a youthful population and abundant financial resources, which can be invested in seeking and developing alternatives to oil. Relying solely on oil for income is no longer a sustainable strategy. We have the means and access to international expertise to explore these alternatives. Thinking ahead and planning for the future is neither a bad thing nor taboo, but it is a responsibility we owe to the next generation. We must build a new future with alternatives that have been serving us since 1946.

By Kamel Al-Harami

Independent Oil Analyst
Email: naftikuwaiti@yahoo. com