OPEC+ crude oil production drops in March as sanctions hit Russian output: Platts survey

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Crude oil production from OPEC+, a coalition of OPEC and other oil producers, fell by 300,000 b/d in March as sanctions hit Russian output, the latest Platts survey by S&P Global Commodity Insights from April 11 found.

OPEC production decreased 60,000 b/d to 28.97 million b/d, while non-OPEC allies saw output fall by 240,000 b/d to 13.40 million b/d in March.

Production in the largest non-OPEC producer in the group, Russia, fell by 260,000 b/d to 9.6 million b/d in March. This followed the introduction of G7 price caps and EU import bans on most Russian crude and oil products from Dec. 5, 2022, and Feb. 5, respectively. The restrictions are part of Western sanctions imposed in response to Russia's invasion of Ukraine.

Russian officials said previously that the country will cut crude output by 500,000 b/d from February levels from March until the end of 2023. They said that this is in order to reduce the discount on Russian crude and to stabilize deliveries. Sanctions are expected to further hit Russian output in coming months.

A recovery in Kazakhstan's production partially offset Russia's significant drop in production on the non-OPEC side.

In contrast, OPEC's biggest producer, Saudi Arabia, saw production hold relatively steady at 10.45 million b/d in March, down just 10,000 b/d from February. Stronger exports were supported by draws from inventories, while the Jazan refinery ramped up runs, the survey found.

Saudi Arabia is one of the OPEC+ countries that said April 2 that they will join Russia in introducing voluntary cuts from May until the end of 2023. Saudi Arabia plans to cut 500,000 b/d. Iraq has pledged to cut 211,000 b/d, the UAE 144,000 b/d, Kuwait 128,000 b/d, Kazakhstan 78,000 b/d, Algeria 48,000 b/d, Oman 40,000 b/d and Gabon 8,000 b/d.

The latest voluntary cuts total 1.66 million b/d and add to existing quotas.

Iraq recovery

Overall OPEC production dropped, as seven of its 13 member countries saw production decreases that more than offset increases in output in Iraq. While most of these drops were marginal, Angolan output dropped by 40,000 b/d to 1.91 million b/d as a result of maintenance at the Dalia field.

Iraqi output grew by 60,000 b/d to 4.39 million b/d, the survey found. Production recovered from disruptions linked to pipeline repairs following the major earthquake that hit Turkey and Syria in early February, as well as maintenance at the West Qurna 2 project.

With several countries still struggling to raise or even maintain output due to internal disruptions or lack of investment, the OPEC+ alliance continues to massively underproduce its quotas, even after the group agreeing to slash them by 2 million b/d from November 2022 through the end of 2023.

Overall OPEC+ compliance among countries with quotas was 160% in March, according to S&P Global calculations, meaning the 22 members combined for a 2.173 million b/d shortfall to their production targets. This is the largest gap between OPEC+ production and quotas since October 2022, the month before the group instituted its 2 million b/d cut.

OPEC members Iran, Libya and Venezuela are exempt from quotas.

OPEC+ ministers are next due to meet on June 3-4, with many analysts expecting a tight market in the second half of the year.

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

OPEC+ Production in March (million b/d)

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

Click here to read the previous survey: OPEC+ crude oil production drops in February despite uptick in Russia: Platts survey