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(Bloomberg) – OPEC+’s audacious bid to punish its oil-quota cheats prompted a renewed plunge in crude on Wednesday, as growing tensions with Kazakhstan stoked fears of an escalating price war.

Oil markets have been jittery since early April, when the producers’ group led by Saudi Arabia stunned traders by accelerating the revival in its output. This was an apparent effort to discipline over-producing members by driving down prices, yet Kazakhstan — the greatest offender — has continued to pump as usual at its biggest fields.

Energy Minister Erlan Akkenzhenov appeared on Wednesday to reject pressure to bring Kazakhstan’s output in line with its quota, saying the nation is unable to make significant cuts and would prioritize national interests over OPEC+ obligations.

Other OPEC+ members threatened to hit back, with Reuters reporting that several nations will seek another bumper supply hike for June. A later statement from Kazakhstan’s Energy Ministry, saying it was fulfilling its OPEC+ obligations and seeking “mutually acceptable solutions” to its oil production management, did nothing to reverse the rout.

Analysts warned of the growing risk that the cartel’s internal spat would exacerbate a global oil surplus and worsen an already bearish outlook. As of 1:45 p.m. in New York, U.S. crude futures were down almost 3% near $62 a barrel.

“The ‘Kazakhstan-first position’ increases the odds of another accelerated voluntary production increase come June,” said Helima Croft, RBC’s head of commodities strategy. It “makes the May ministerial a must-watch event.”

The Organization of the Petroleum Exporting Countries and its partners will hold a video conference on May 5 to decide what to do in June. The default option is a modest monthly output addition of 138,000 barrels a day (bpd), in line with its long-term plan. Another super-sized hike of 411,000 bpd, equivalent to three monthly increases in one, would signal an escalation of internal tensions and risk a renewed selloff in crude futures.

Chevron's Tengiz oil field in Kazakhstan

OPEC+ delegates, who asked not to be identified, said the group hasn’t yet formally discussed its plans for June. One predicted they would opt for the smaller hike, while another said all options could be up for discussion.

Whatever they decide could have major ramifications for OPEC+, a nine-year partnership between the Saudis and former rivals including Russia.

Kazakhstan’s defiance is reminding some cartel-watchers of how Angola quit the organization in 2023 following a feud over its production quota. Like the African country, Kazakhstan relies on oil majors such as Chevron Corp. to develop its resources. The government has limited sway over these companies as they work to expand the country’s capacity, and people familiar with the matter have told Bloomberg that the energy ministry has so far made little effort to rein them in.