The OPEC+ group of oil producers decided to continue raising collective production in June by further easing the output cuts, OPEC left its forecast of oil demand growth unchanged, while the Middle Eastern oil and gas companies entered into major new agreements for energy supply and new technology development.
OPEC+ Boosts Oil Supply
Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman in early May decided to increase production by 411,000 barrels per day (bpd) in June compared to May, in the second such monthly increase in two months.
These countries of the OPEC+ coalition “reaffirm commitment to market stability on current healthy oil market fundamentals and adjust production upward,” OPEC said, adding that the gradual increases may be paused or reversed subject to evolving market conditions.
“This flexibility will allow the group to continue to support oil market stability. The eight OPEC+ countries also noted that this measure will provide an opportunity for the participating countries to accelerate their compensation,” OPEC said in a statement.
OPEC Sees Slower Production Growth from Non-OPEC+ Producers
In its Monthly Oil Market Report (MOMR) for May, OPEC said it expects slower growth from rival producers outside the OPEC+ pact.
Liquids supply from OPEC+’s rivals – including the United States, Canada, Brazil, and Norway – is set to increase by 800,000 bpd in each of 2025 and 2026, down by 100,000 bpd compared to OPEC’s previous assessment of 900,000-bpd growth for both years.
“The potential impact on production levels in 2025 and 2026 of the decline in upstream E&P oil investments will constitute a challenge, despite the industry’s continued focus on efficiency and productivity improvements,” OPEC said, referring to US crude oil and condensate production.
“Efficiency gains are expected to continue to increase on a well basis in the short term, through drilling longer laterals, more efficient operations, reduced downtime and flattening production decline curves,” the organization said in its monthly report.
On the other hand, OPEC left its global oil demand growth projections unchanged from April, expecting demand to grow by 1.3 million bpd in both 2025 and 2026.
OPEC expressed in the middle of May cautious optimism about the global trade and economy, in light of the US-UK trade deal and the “significant de-escalation” in the US-China trade relations after the world’s two largest economies agreed to reduce tariffs on each other for 90 days while continuing trade negotiations.
“The global economy continues to face uncertainty amid a shifting trade landscape, though early indicators suggest resilient consumer demand in major economies in 1Q25. Despite declining consumer confidence, consumer spending has remained relatively stable. Positive signals from trade negotiations also provide some support,” OPEC said.
Saudi Arabia’s New Shale Gas Field Could Slash Crude Burn
Saudi Arabia’s Jafurah shale gas field, set to start production in 2025 and the largest of its kind globally, could dramatically cut crude burn in the Kingdom, which has long relied on the direct use of crude oil in power plants and industrial facilities, primarily for electricity generation, a Rystad Energy analysis showed.
By tapping into unconventional gas, Saudi Arabia could displace up to 350,000 bpd of crude burn by 2030. The increased gas supply would not only curb domestic crude use but also free up more oil and refined products for export, strengthening the country’s position in global energy markets, Rystad Energy said.
“As the initiative advances, the success of this shift will depend on robust midstream infrastructure, downstream integration and deeper-zone drilling campaigns,” commented Pankaj Srivastava, Senior Vice President, Commodities Markets – Oil, at Rystad Energy.
Saudi Aramco Earnings Drop on Lower Oil Prices
Saudi state oil giant Aramco reported a decline in net income and cash flow for the first quarter of the year, as economic uncertainty weighed on oil prices. Aramco’s net income fell to $26.0 billion from $27.3 billion a year earlier, cash flow from operating activities declined to $31.7 billion from $33.6 billion, and free cash flow dropped to $19.2 billion from $22.8 billion.
Aramco’s board declared a base dividend of $21.1 billion for Q1 2025, up by 4.2 percent year-on-year, and a performance-linked dividend of $200 million, much lower than the performance-linked payout for Q1 2024.
“Global trade dynamics affected energy markets in the first quarter of 2025, with economic uncertainty impacting oil prices,” Aramco President and CEO Amin Nasser said.
“Such periods also highlight the importance of disciplined capital planning and execution while we continue to take a long-term view.”
Continued Nasser, “Our ambition is reflected in milestones already announced in 2025, including progress towards our gas production growth target, our global retail expansion, the advancement of our petrochemicals strategy, headway in blue hydrogen business development, and further innovation in carbon capture.”
Deals and Contracts
In deals and contracts, Saudi Aramco and China’s leading manufacturer of new energy vehicles and power batteries, BYD, have agreed to explore closer collaboration in new energy vehicle technologies.
Saudi Aramco Technologies Company (SATC), Aramco’s wholly-owned subsidiary, and BYD signed a joint development agreement aimed at fostering the development of innovative technologies that enhance efficiency and environmental performance.
“Aramco is exploring a number of ways to potentially optimize transport efficiency, from innovative lower-carbon fuels to advanced powertrain concepts,” said Ali A. Al-Meshari, Aramco Senior Vice President of Technology Oversight & Coordination.
Italian engineering group Saipem has renewed its framework agreement with Saudi Aramco for offshore activities, and the long-term agreement now extends until the end of 2027.
With the renewal of the agreement, Saipem is confirmed in the exclusive list of contractors selected by Saudi Aramco who are eligible to bid for work orders, known as CRPOs (Contract Release Purchase Orders). These contracts may relate to both the construction of new investment projects and any projects aimed at maintaining production capacity from Saudi Arabia’s offshore fields. Should Saipem be awarded contracts for activities within the Kingdom under the agreement, these will be carried out by a consortium between Snamprogetti Saudi Arabia (a subsidiary of Saipem SpA) and STAR (Saipem Taqa Al-Rushaid Fabricators Co).
Technip Energies has been awarded a significant engineering contract for the North Field Production Sustainability Offshore Compression Project in Qatar. A “significant” award for Technip Energies is a contract award representing between 50 million euros and 250 million euros of revenue.
Under the contract, Technip Energies, having completed the Front-End Engineering and Design (FEED) phase, will provide Detailed Engineering Design for two offshore compression complexes for QatarEnergy LNG. Each will comprise large offshore platforms, flare platforms, interconnected bridges, and other associated structures.
QatarEnergy has entered into a long-term condensate supply agreement with Singapore-based Shell International Eastern Trading Company (SIETCO), a wholly-owned subsidiary of Shell Plc. The agreement stipulates the supply of up to 285 million barrels of condensate to Shell for 25 years starting from July 2025.
“We are delighted to sign QatarEnergy’s first 25-year condensate sales agreement, the largest and longest duration condensate agreement to date,” said Saad Sherida Al-Kaabi, Qatar’s Minister of State for Energy Affairs and President and CEO of QatarEnergy.
Qatar is also ramping up its renewable energy capacity. At the end of April, Sheikh Tamim bin Hamad Al Thani, the Amir of the State of Qatar, inaugurated the Ras Laffan and Mesaieed solar PV power plants with a combined capacity of 875 megawatts (MW), which will more than double the State of Qatar’s solar energy production to 1,675 MW.
