London — OPEC and its allies slashed almost one-fifth of their crude oil production in May, the first month of their landmark supply accord, according to the latest S&P Global Platts survey of the group's output.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Prodded by the coronavirus pandemic and oil market meltdown to implement an unprecedented 9.7 million b/d in collective cuts, the 23-country OPEC+ coalition mostly delivered.
OPEC's 13 members dropped their output to 24.32 million b/d, for a compliance rate of 82% with their prescribed cuts, the survey found. Russia and nine other partners performed better, pumping a combined 13.89 million b/d and making 91% of their cuts, bringing the whole OPEC+ group's collective compliance to 85%, according to Platts calculations.
The supply curbs are scheduled to run through July, the OPEC+ alliance announced at its June 6 meeting, as the bloc seeks to speed the market's recovery from the pandemic.
The compliance figures are being closely monitored by OPEC+ members, who agreed that any shortfalls in May and June compliance would be made whole with extra production cuts this summer.
OPEC members Iraq, Nigeria and Angola, along with non-OPEC participant Kazakhstan have already been publicly called out by their counterparts for their overproduction.
Iraq, whose history of quota flouting has long been a sore spot among the coalition, pumped 4.19 million b/d in May, nearly 600,000 b/d above its cap, making it the worst offender by far, the Platts survey found.
Nigeria, also frequently out of compliance, produced nearly 300,000 b/d in excess of its quota, while Angola was 90,000 b/d above its target and Kazakhstan was 161,000 b/d over, according to the Platts figures.
Ministers from all four countries have declared their allegiance to the OPEC+ agreement and pledged to improve their performance going forward.
But they are not the only producers with work to do.
Russia, the main non-OPEC partner, pumped 8.60 million b/d, about 110,000 b/d more than its quota, according to the survey. Russian energy minister Alexander Novak had teamed up with Saudi counterpart Prince Abdulaziz in the weeks leading up to the June 6 meeting to pressure Iraq and other noncompliant members to commit to extra cuts.
Saudi Arabia produced 8.50 million b/d, the survey found, almost in line with its quota of 8.49 million b/d. That is the kingdom's lowest output since January 2011, not including September 2019, when a missile attack on its Abqaiq crude processing facility temporarily caused half of the country's capacity to be shut-in.
The OPEC+ deal calls for cuts of 23% from baseline production levels in October 2018, except for Saudi Arabia and Russia, who were given identical baselines of 11 million b/d.
In all, the OPEC+ coalition lowered its output by a combined 8.28 million b/d from the baseline of 43.85 million b/d.
A nine-country monitoring committee co-chaired by Saudi Arabia and Russia will convene on June 18 and monthly thereafter to assess compliance and make recommendations on quotas going forward. The collective production cuts are scheduled to roll back to 7.7 million b/d in August, for now.
Sanctions-hit Iran and Venezuela are exempt from the quotas, as is war-torn Libya. Iran kept its output steady at 2.02 million b/d in May, while Venezuela's production fell to 550,000 b/d, the survey found.
Libya, with its ports blockaded by rebel militia, pumped just 70,000 b/d in May, but could see a rebound in the coming weeks pending the outcome of negotiations with tribes controlling its southern fields. But its security remains volatile.
Platts is one of six secondary sources used by the OPEC+ coalition to track output. Platts has compiled OPEC member production data since 1988 and has now begun to survey production by the other participants in the OPEC+ agreement.
The Platts figures are compiled by surveying oil industry officials, traders and analysts, as well as reviewing proprietary shipping, satellite and inventory data.
OPEC+ May crude oil production (million b/d)
- On June 6, OPEC and its allies agreed to continue their current production cuts through July, except for Mexico, whose participation will end after June. The cuts are scheduled to taper to 7.7 million b/d from August to December, and then down to 5.8 million b/d from 2021 through April 2022.
- The cuts are determined from an October 2018 baseline production level, except for Saudi Arabia and Russia, who were given baselines of 11 million b/d.
- Iran, Libya and Venezuela are exempt from the cuts.
- The S&P Global Platts OPEC survey, which has been published since 1988, measures wellhead crude oil production in each member country