The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are grappling with the decision of whether to loosen oil production caps, as the crude supply and demand balance shows no signs of imminent improvement.

According to Reuters, despite the pressure to maintain steady prices, OPEC+ risks losing further control over the market.

OPEC+ has been withholding 5.85 million barrels per day (bpd) of production, which is about 5.7% of the global demand, in an effort to support the market.

These measures have been in place since 2022, and the group had announced plans to roll back 2.2 million bpd of these cuts starting in the first quarter of 2024. However, this rollback has been postponed five times due to weak oil demand and rising global crude output. The current plan is to begin unwinding some of the output cuts in April 2025.

The market situation is unlikely to improve by April, potentially worsening due to strained trade relations between the United States and other major economies, which could suppress oil demand growth. U.S. President Donald Trump has been pushing for lower oil prices and has engaged in discussions with Russian President Vladimir Putin, leading to speculation about a ceasefire in Ukraine and a possible easing of U.S. sanctions on Russian oil production.

OPEC+ has successfully maintained relative stability in oil prices over the past years, with Brent crude prices ranging from $70 to $100 a barrel since 2021, barring periods of volatility.

However, by limiting production, OPEC's market share has declined as non-member producers, particularly in the United States, have increased their output. The U.S. Energy Information Administration (EIA) forecasts U.S. oil production to reach a record 13.6 million bpd in 2025, with global oil production expected to grow by 1.6 million bpd that year.

Internal strains within OPEC+ are also emerging. Kazakhstan's Tengiz field expansion, led by Chevron (NYSE: CVX ), is set to boost production significantly, potentially requiring deeper cuts from the country.

Nigeria has increased production, and Iraq's Kurdistan region is poised to resume 300,000 bpd of oil exports after a two-year hiatus. The United Arab Emirates has also expanded its capacity, reaching nearly 5 million bpd.

The International Energy Agency (IEA) predicts that supply growth will outstrip global oil demand, which is expected to rise by 1.1 million bpd in 2025.

This could lead to rising oil inventories if production exceeds demand. OPEC+ faces the challenge of deciding whether to delay the easing of production cuts, which could strain relations with members like Trump, or to increase production in an already well-supplied market, risking a price sell-off. The group's decision may have lasting implications for its credibility and market share.

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