Can Saudi Arabia Rescue OPEC+?

As trade tensions escalate between the world’s two largest economies, fears are mounting that the ongoing tit-for-tat tariffs between the United States and China could significantly dampen global oil demand. The pressure is intensifying on the OPEC+ alliance, threatening its cohesion during one of the most turbulent periods since its inception.

With each new round of tariff hikes, market optimism over energy demand growth continues to erode. Concerns are growing over a potential global economic slowdown that could reduce oil consumption and apply further downward pressure on oil prices. The prolonged trade dispute between Washington and Beijing has been a central driver of this volatility, pushing the annualized swing in oil futures to 42.8% as of April 21, the highest in nearly two and a half years.

Tariff Turbulence and Unstable Demand

Recent remarks by former U.S. President Donald Trump, suggesting the U.S. may reduce tariffs on Chinese imports by as much as 50%, briefly lifted market sentiment, resulting in minor gains. However, optimism faded quickly after Beijing denied any active trade negotiations, asserting that resolution would require a full reversal of Washington’s unilateral measures.

Such divergent messaging illustrates the fragility of hopes for a near-term economic rebound. The tariff regime has not only disrupted global trade flows but also undermined industrial momentum in multiple regions—diminishing energy demand and weakening oil consumption. A 1% decline in China’s GDP growth is estimated to slash oil demand by approximately 100,000 barrels per day.

Reinforcing this outlook, Fatih Birol, Executive Director of the International Energy Agency (IEA), recently warned of further downside risks for oil prices in 2025, citing an oversupplied market and weakening demand, particularly from China. The agency revised its outlook, stating that demand appears “weaker than previously expected,” especially as geopolitical frictions continue to constrain global economic growth.

While crude has recently rebounded to around $68 per barrel, prices remain below the levels seen prior to Trump’s early-April tariff pronouncements.

Saudi Arabia: The Cornerstone of OPEC+

Amid market gyrations, Saudi Arabia has continued to play a pivotal role in holding the OPEC+ framework together, even as internal and external challenges mount. Since the alliance’s formation in 2016, Riyadh has acted as the de facto swing producer, adjusting its output to absorb market shocks, whether by cutting supply or bolstering it in times of shortage.

What distinguishes the current phase is the scale of economic burden shouldered by the Kingdom. Of the 3.15 million barrels per day in agreed production cuts across the alliance, more than 2 million barrels have come from Saudi Arabia alone—nearly double the combined contributions of all other member states.

This disproportionate commitment is prompting serious questions about Riyadh’s willingness to continue bearing such a heavy load, particularly considering persistent non-compliance from countries like Kazakhstan and Iraq, which have repeatedly exceeded their quotas.

Kazakhstan Defies Quotas — OPEC+ at a Crossroads

Kazakhstan has openly signaled its intent to prioritize domestic interests over its alliance commitments. Energy Minister Erlan Akkenzhenov recently announced that the country’s production in February rose to 2.12 million barrels per day, which is 13% higher than in January—despite technical issues along the Caspian Pipeline Consortium (CPC) route.

This expansionist stance goes beyond technical challenges. It strikes at the heart of OPEC+’s foundational principle: coordinated production management tailored to global market dynamics.

Market Management and Political Bargaining

To pre-empt a worst-case scenario, eight OPEC+ member states are scheduled to convene for a mini summit on May 5. The gathering is expected to yield critical decisions on the future of production quotas. Early indications suggest that Saudi Arabia may propose alternative frameworks—potentially revising quotas based on each country’s compliance capabilities, or introducing a more equitable distribution of cuts.

Kazakhstan’s recent defiance has raised fears that Riyadh might be pushed toward a painful price war at a highly sensitive moment. While this remains an unlikely scenario, the prevailing uncertainty in the global economy—exacerbated by Trump-era tariffs, particularly those targeting China—continues to pose a real threat to oil demand.

For now, Saudi Arabia appears committed to preserving the integrity of the OPEC+ framework. But the question looms: Can Riyadh continue to shoulder the burden of unity and market balance without meaningful support from its partners? Given current market realities, the task is formidable. Yet Saudi Arabia’s outsized influence in energy markets, along with its key strategic alliances, may yet prove decisive in navigating these headwinds.