Exclusive-OPEC+ to further speed up oil output hikes, sources say

By Olesya Astakhova and Ahmad Ghaddar

LONDON/MOSCOW (Reuters) -OPEC+ will accelerate oil output hikes and could bring back to the market as much as 2.2 million barrels per day by November, five OPEC+ sources said as the group's leader Saudi Arabia seeks to punish some fellow members for producing above quotas.

OPEC+ shocked oil markets in April by agreeing a bigger-than-expected output hike for May despite weak prices and slowing demand.

OPEC's de facto leader Saudi Arabia designed the move to punish Iraq and Kazakhstan for poor compliance with production quotas as Riyadh signalled it was unwilling to prop up the market any longer, sources have said.

The developments take place days before U.S. President Donald Trump is due to visit Saudi Arabia to discuss an arms package and a nuclear agreement. Trump has repeatedly asked OPEC+ to pump more oil to help ease gasoline prices as he faces inflation pressures at home, including from his tariff wars.

The shift in Saudi policy suggests the kingdom wants to expand its market share, a major change after five years spent balancing the market through deep output cuts.

OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, is cutting output by almost 5 million bpd or 5% of global demand.

The cuts were agreed in various stages since 2022 to support the market and many cuts are due to remain in place until the end of 2026.

In December, OPEC+ agreed to gradually phase out the 2.2 million bpd voluntary part of total cuts by the end of September 2026 but decided in April to accelerate this process from May.

The group agreed another big output hike for June on Saturday, taking the total it plans to release in April, May and June to nearly 1 million bpd.

OPEC+ will maintain the trend and will likely agree in June to release another 411,000 bpd in July, the five OPEC+ sources briefed on the matter said, speaking on condition of anonymity.

Saudi Arabia repeated its warnings against poor compliance on Saturday, one of the sources said.

OPEC, the Saudi government's communications office, and the office of Russian Deputy Prime Minister Alexander Novak did not immediately reply to a request for comment.

The group will likely approve accelerated hikes for August, September and October as well if Iraq, Kazakhstan and other laggards do not improve compliance and fail to deliver compensation cuts, the sources said.

If compliance does not improve, the voluntary cuts will be unwound by November, one of the sources said, referring to the 2.2 million bpd portion of cuts by eight members.

Kazakhstan defied OPEC+ last month when its energy minister said he will prioritise national interests over those of the OPEC+ group when deciding on oil production levels. Kazakhstan's April oil output exceeded its OPEC+ quota despite a 3% fall.

Oil prices fell to a four-year low in April below $60 per barrel on accelerated OPEC+ hikes and as Trump's tariffs raised concerns about a global slowdown.

News of accelerating hikes will weigh on oil prices until compliance improves, UBS analyst Giovanni Staunovo said.

(Additional reporting by Alex Lawler, Maha El Dahan, Yousef Saba and Dmitry Zhdannikov;Writing by Dmitry Zhdannikov and Alex LawlerEditing by Frances Kerry, Helen Popper and Giles Elgood)