OPEC-ministers
OPEC+ posts 2.84 mbd underproduction in June
Sopuruchi Onwuka
Hopes that the Organization of Petroleum Exporting Countries (OPEC) and its coalition members can rapidly rise to the challenge of supply gaps in the international oil market is beginning to fade as gaps between the groups output projections and actual barrel deliveries continue to widen.
Output deficits relative to production targets becomes more worrisome even after Saudi Arabia boosted output as it struggles to repair its shaky relationship with the United States, Russia pumped more as it seeks to make up for steep price discounts, and Libya doubled its output to over a million barrels per day.
Despite significant production rise since the 24 nation group started output recovery in late 2021, returning to pre-pandemic production level has been difficult for the group whose members have suffered gross exploration underinvestment and production declines.
Nigeria which is a prominent member of OPEC+, for instance, has been unable to rise to its assigned output quota as the group’s compliance rate drops to lowest. The oil group’s underproduction rose to a whopping 2.84 million b/d in June, according to data corroborated by international market and shipping players.
Some of the OPEC+ group’s delegates told agency sources the alliance suffered massive shortfall of 2.84 million barrels per day (bpd) in June between actual production and the target oil output level.
As OPEC+ is unwinding its cuts, more and more members are falling further behind their quotas due to a lack of capacity or investment in supply. Consequently, the gap between nameplate production per the agreement and actual production continues to widen.
According to the report of survey by Argus media in the month, OPEC+ pumped more than 2.5 million bpd below its target in June, despite a rebound in Russia’s oil production that helped the group’s output rise by 730,000 bpd from May.
Russia’s oil production rose in June and was approaching the levels last seen in February, just before the Russian invasion of Ukraine. Most of the rebound was due to higher intake from domestic refiners.
The ten OPEC producers in the OPEC+ pact pumped 24.8 million bpd of crude oil in June, OPEC data showed in the Monthly Oil Market Report (MOMR), with production falling 1 million bpd short of the target levels.
Top OPEC producer Saudi Arabia naturally raised its crude oil production by the most in June compared to May. OPEC’s secondary sources stated that even the Saudis were lagging behind their quota for June.
Saudi Arabia’s oil production rose by 159,000 bpd to 10.585 million bpd. To compare, the Saudi target was 10.663 million bpd, so the Kingdom was 78,000 bpd below its quota last month using secondary source figures.
OPEC+ is expected to continue to underperform by a lot compared to its production targets for July and August after the group decided to accelerate the rollback of the cuts and have those completely unwound by the end of August.
Already, Libyan production is back on track, and production rates in the country have surged above 1 million b/d, almost doubling month-on-month less than one week after the Tripoli government lifted the blockade of oil ports and infrastructure. Oil output had more than halved since mid-April.
The increase follows an agreement with protesters and tribal heads reached to reopen fields and export terminals that had been largely shut since mid-April. Before the restart, production was down to 560,000 barrels a day.
