OPEC+ Increases Crude Production, While The Large Quota Deficit Persists

• OPEC pumps 28.83 mil b/d, Russia-led allies add 13.26 mil b/d
• Russia, Saudi Arabia gains offset Kazakhstan, Libya losses
• OPEC+ quota compliance jumps to 192% in June

According to the most recent Platts poll by S&P Global Commodity Insights, OPEC and its Russia-led allies increased crude oil production by 390,000 b/d in June, but nearly all members continued to struggle to meet their output targets.

Steady gains 

OPEC’s 13 members pumped 28.83 million b/d in June, up 210,000 b/d from May, with steady gains posted by Saudi Arabia, Nigeria, Angola and the UAE.

Meanwhile, the nine countries partnering with the producer group produced 13.26 million b/d, a rise of 180,000 b/d, amid a recovery in Russian output, which offset major maintenance in Kazakhstan.

Combined, OPEC+ crude production rose to a three-month high of 42.09 million b/d in June, the survey found.

Several members have been consistently facing supply disruptions in 2022 caused by sanctions, geopolitical instability, unplanned outages, scheduled maintenance and technical issues.

In June, the coalition underproduced its collective targets by 2.70 million b/d, with quota compliance surging to a hefty 192%, according to S&P Global calculations.

The big two

The alliance’s two biggest producers — Russia and Saudi Arabia — added a combined 560,000 b/d to the market, albeit under different circumstances.

Russia pumped 9.75 million b/d in June compared with 9.29 million b/d in May and 9.14 million b/d in April, the survey showed.

The June figure is still, however, 913,000 b/d below its production quota, indicative of the sharp decline in Russian output from prewar levels.

Russia also ramped up deliveries to China and India, as buyers there took advantage of price discounts.

Exports were largely stable, but the kingdom significantly built up its crude inventories while the Ras Tanura refinery was on partial maintenance, survey panellists said.

Outages persist

Only four countries saw a fall in output in June, but two of these posted weighty declines.

Libyan supply disruptions escalated further in June, caused by more blockades and shutdowns in its key oil infrastructure.

Crude output slumped to 650,000 b/d, its lowest since October 2020, as the country’s political crisis is now affecting a large chunk of its oil supply.

Libya is exempt from a quota under the OPEC+ deal, as are Iran and Venezuela, both of which had steady production in June.

Africa’s two largest oil producers — Nigeria and Angola — added 70,000 b/d and 60,000 b/d respectively in June, but both remain way below their production quota.

Road ahead

The OPEC+ alliance has been gradually raising its quotas each month, with the aim of restoring output to pre-pandemic levels by August.

However, the quota underperformance has drawn the ire of consuming countries, including the US, which has repeatedly called on the producer group to supply cruder.

However, that capability is largely limited to Saudi Arabia and the UAE, which hold almost all of the group’s remaining spare capacity.

US President Joe Biden is scheduled for a trip to Saudi Arabia July 14-16 for a meeting with Gulf leaders, where the oil market is expected to be a subject of discussion.

The OPEC+ alliance itself will meet on Aug. 3 to decide on production levels for September and possibly beyond.

OPEC+ crude production

EXEMPT MEMBERS

Unit: million b/d

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Source: S&P Global

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