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OPEC+ output sees biggest drop in six months, but short of pledged cuts: Platts survey



January crude oil production down 340,000 b/d

OPEC produces 26.49 mil b/d, allies add 14.72 mil b/d

Members with quotas pump 275,000 b/d above targets

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OPEC+ crude output fell 340,000 b/d in January, the steepest drop in six months, as some members implemented voluntary cuts and protesters shut down Libya’s largest field for more than two weeks, the latest Platts survey from S&P Global Commodity Insights found.

The production decline, however, was far less than the approximately 700,000 b/d in cuts pledged by the group for the first quarter of 2024, with Iraq well above its quota, while Kazakhstan, the UAE and Kuwait also missed their new targets, according to the survey.

OPEC’s 12 countries contributed the lion’s share of the month-on-month production decline, with core group output slipping 310,000 b/d.

OPEC members pumped 26.49 million b/d of crude collectively, down from 26.80 million b/d in December, when Angolan production is removed. The West African country quit the group in January following a row over quota cuts.

Meanwhile 10 Russia-led allies, who began coordinating with the producing group in 2016 to create OPEC+, saw their oil output fall 30,000 b/d month-on-month to 14.72 million b/d, driven by slight declines in Omani and Russian production, the survey found.

New cuts

Libya, which is exempt from a quota under the OPEC+ deal, recorded the largest drop in the alliance in January after its 300,000 b/d Sharara oil field suffered an 18-day shut-in by protesters, invoking memories of political actors targeting oil installations in the North African country.

Meanwhile, Kuwait and Iraq, which both agreed to cut output significantly at the last OPEC+ meeting in November, saw crude output fall 100,000 b/d and 80,000 b/d respectively. Both, however, are above their quotas, according to the survey, with Iraq overproducing by 270,000 b/d.

Nigeria and Algeria also saw slight declines in production, with the latter completing its voluntary reductions agreed last year. Some crude was processed at Nigeria’s Dangote refinery, a long-delayed mega-project near Lagos that finally began testing in January, but the bulk of it was supplied in December by state-owned NNPC.

The UAE was one of the few gainers in the month, after securing a long-awaited production baseline increase under the OPEC+ deal in November, with its production rising 50,000 b/d in January, the survey found.

OPEC kingpin Saudi Arabia continued to hold the line on its crude output, pumping just below its target. The kingdom has been implementing a voluntary 1 million b/d cut since July as it leads the producer bloc in its market tightening efforts.

Market share

The OPEC+ coalition has implemented a number of overlapping production cuts since 2022, the most recent of which came into force on Jan. 1, when Saudi Arabia pledged to maintain its 1 million b/d cut, while Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman said they would roll back a combined 696,000 b/d and Russia said it would reduce its oil exports — though not necessarily production — by 500,000 b/d.

At the same time, quotas for underproducing African members like Nigeria and Republic of Congo were reduced to reflect shrinking capacity, while the UAE was awarded a baseline increase for its capacity additions.

The failure of most African members to pump anywhere near their targets over the past several months had masked non-compliance from Iraq and other members.

Under the new quotas, the 18 members subject to output limits pumped 275,000 b/d above their collective targets for January.

Still, January’s OPEC+ production fall could augur a further drop in market share for the alliance, just as non-OPEC countries like the US, Canada and Guyana, as well as Brazil, are seeing crude output surge. Brazil joined OPEC+ in January but is not subject to production quotas.

OPEC+ production accounts for some 40% of global supply.

It also comes as the alliance battles to improve a weak market outlook amid disappointing economic indicators from China, the world’s largest crude importer, and significant volatility caused by wars in Europe and the Middle East.

Dated Brent was last assessed by Platts, a unit of S&P Global, at $81.69/b on Feb. 7 after flirting with the $100/b mark last September.

While OPEC+ ministers have said they are ready to deepen cuts at or before the next meeting on June 1 in Vienna, analysts say compliance could become a bone of contention in the coming months. Riyadh, which has called for production discipline from fellow members, is producing at lows not seen since the depths of the COVID-19 pandemic.

The Platts survey measures wellhead production and is compiled using information from oil industry officials, traders and analysts, as well as by reviewing proprietary shipping, satellite and inventory data.

OPEC-10 Jan-24 Change Dec-23 Quota Over/under
Algeria 0.91 -0.04 0.95 0.910 0.000
Congo-Brazzaville 0.26 0.00 0.26 0.280 -0.020
Equatorial Guinea 0.05 0.00 0.05 0.070 -0.020
Gabon 0.23 0.00 0.23 0.170 0.060
Iraq 4.27 -0.08 4.35 4.000 0.270
Kuwait 2.45 -0.10 2.55 2.410 0.040
Nigeria 1.48 -0.05 1.53 1.500 -0.020
Saudi Arabia 8.97 0.02 8.95 8.980 -0.010
UAE 2.95 0.05 2.90 2.910 0.040
TOTAL OPEC-10 21.57 -0.20 21.77 21.230 0.340

OPEC EXEMPT Jan-24 Change Dec-23 Quota Over/under
Iran 3.11 0.01 3.10 N/A N/A
Libya 1.02 -0.12 1.14 N/A N/A
Venezuela 0.79 0.00 0.79 N/A N/A
TOTAL OPEC-13 26.49 -0.31 26.80 N/A N/A

NON-OPEC WITH QUOTAS Jan-24 Change Dec-23 Quota Over/under
Azerbaijan 0.48 0.00 0.48 0.551 -0.071
Bahrain 0.17 0.00 0.17 0.196 -0.026
Brunei 0.08 0.01 0.07 0.083 -0.003
Kazakhstan 1.56 0.00 1.56 1.468 0.092
Malaysia 0.37 0.00 0.37 0.401 -0.031
Oman 0.77 -0.03 0.80 0.759 0.011
Russia 9.42 -0.01 9.43 9.449 -0.029
Sudan 0.03 0.00 0.03 0.064 -0.034
South Sudan 0.15 0.00 0.15 0.124 0.026
TOTAL NON-OPEC WITH QUOTAS 13.03 -0.03 13.06 13.095 -0.065

NON-OPEC EXEMPT Jan-24 Change Dec-23 Quota Over/under
Mexico 1.69 0.00 1.69 N/A N/A
TOTAL NON-OPEC 14.72 -0.03 14.75 N/A N/A

OPEC+ MEMBERS WITH QUOTAS Jan-24 Change Dec-23 Quota Over/under
TOTAL 34.60 -0.23 34.83 34.325 0.275

OPEC+ Jan-24 Change Dec-23 Quota Over/under
TOTAL 41.21 -0.34 41.55 N/A N/A

Unit: million b/d

Source: Platts OPEC+ survey by S&P Global Commodity Insights

Note: Angola left OPEC at the end of 2023 and its production is no longer included in the survey

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