News ID: 302939
Published: 0205 GMT May 10, 2021

OPEC+ output up in April, on surges from Iran, Russia: Platts survey

OPEC+ output up in April, on surges from Iran, Russia: Platts survey
REUTERS

A resurgent Iran pumped its largest volume of crude in almost two years in April, while an increasingly compliance-challenged Russia also boosted its output yet again, bringing total production by OPEC and its allies to a three-month high, according to the latest S&P Global Platts survey.

OPEC produced 25.28 mbd, up 80,000 bpd from March; Russia and eight other non-OPEC partners in the group's supply accord added 13.21 mbd, an increase of 130,000 bpd, the survey found.

The rising output is a preview of the wave of OPEC+ crude set to hit the market over the next few months.

In anticipation of rising global oil demand, the alliance plans to roll back its quotas by a 350,000 bpd in May, another 350,000 bpd in June, and 441,000 bpd in July, for a total 1.14 mbd rise.

Meanwhile, Saudi Arabia – which has been reining in an extra one mbd to help support the market – has said it will end its voluntary cut gradually over that span, releasing 250,000 bpd in May, 350,000 bpd in June and 400,000 bpd in July.

The country averaged production of 8.14 mbd in April, the survey found, compared to its quota of 9.12 mbd. Saudi Energy Minister Abdulaziz bin Salman had called the additional cut a goodwill gesture to the rest of the alliance, with the hopes that quota compliance would improve. The survey indicates that several key countries failed to heed the call.

The 10 OPEC members with quotas under the deal and the nine non-OPEC allies achieved a conformity level of 111 percent in April, according to Platts calculations. But take away the extra Saudi cut, and compliance falls to 96 percent, which would be the lowest since July 2020.

Russia, the main non-OPEC partner, pumped 9.50 mbd of crude, a rise of 160,000 bpd from March and well above its quota of 9.38 mbd, with seaborne exports surging in the month.

That is its most since April 2020, when a brief price war broke out in an acrimonious spat over how to manage oil supply through the pandemic, which was later resolved with the current deal.

Iraq, which produced 3.97 mbd, and Nigeria, at 1.60 mbd, also contributed to worsening compliance, hitting their highest levels since May 2020, driven by higher crude exports.

 

Iran up, Libya down

Two members exempt from quotas provided the largest swings within OPEC, but in opposite directions.

Iran, under heavy sanctions by the US, appears increasingly emboldened as indirect talks progress towards a reinstatement of the nuclear deal, ratcheting up production in recent months and finding a steady customer in China, according to market sources. Its April output of 2.43 mbd is a 130,000 bpd increase from March and its highest since May 2019, according to the survey.

The country has ordered a restart of its southern fields, and sources said gas injection activities have increased multifold.

Libya, however, saw its production fall 70,000 bpd to 1.12 mbd, as a funding dispute between state oil companies and the central government caused several fields to be shut in.

The budget strife appears to be resolved, with the country's National Oil Corp. lifting force majeure on loadings out of the port of Marsa el Hariga on April 26, paving the way for production to rebound, though observers expect output to remain volatile amid the political and security instability.

OPEC+ ministers plan to convene online June 1 to review market forecasts, adjudicate compliance, and decide whether to continue with their gradual easing of quotas. Dated Brent was assessed at $68.79/b on May 7, after hitting a nearly two-year high of $70.30 on May 5.

Under OPEC+ rules, countries that pump above their quotas must make up for their excess production by implementing so-called compensation cuts of equal volume by the end of September.

The Platts figures are compiled by surveying oil industry officials, traders and analysts, as well as reviewing proprietary shipping, satellite and inventory data.

 

   
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