Iraq, Russia Other OPEC Members Still Falling Short of Promises
OPEC oil producers have slashed output by more than planned for months in an effort to tackle a looming oversupply. Yet a handful of countries continue to make that job harder.
Iraq, Nigeria and Russia — OPEC’s largest ally — pumped above their quota in October, putting the onus on other members of the alliance to keep the market in balance as crude prices languished amid faltering demand. Their persistent failure to comply may only increase calls for deeper cuts as OPEC+ prepares for a key December meeting.
Iraq and Nigeria reduced output last month — to 4.68 million barrels a day and 1.91 million respectively — but remained short of commitments in the OPEC+ deal, according to a Bloomberg survey published Nov. 1. Russia’s average daily production also stayed above its cap. Kazakhstan — long a laggard — brought average output into line with OPEC+ targets, but the completion of field maintenance toward the end of the month saw supply soar again.
While some countries fail to comply, Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, has made deeper cuts as oil prices limp around $60 a barrel. OPEC and its allies are due to meet in Vienna next month to discuss whether steeper curbs from the group are needed, as already suggested by analysts from Sanford C. Bernstein to Morgan Stanley.
To be sure, Russia is gradually closing the gap between its OPEC+ target and actual production, but it still pumped an average of 39,000 barrels a day more than agreed in October, according to Bloomberg calculations based on Energy Ministry data. Russia has failed to meet its OPEC+ obligations for seven months this year, only bringing output below its cap when exports were curtailed by the Druzhba contamination crisis.
Kazakhstan’s average October output was estimated at 7.74 million tons, or 1.82 million barrels a day, government data compiled by Bloomberg show. Although that’s within its OPEC+ limit, production rebounded toward the end of the month after the Karachaganak field was brought back into operation. Kazakhstan has frequently pumped above its target, but says it’ll comply with its cap when production is averaged from January 2019 to March 2020.