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OPEC+ crude oil output rises in August as record cuts ease: Platts survey

Highlights

OPEC pumps 24.37 mil b/d, non-OPEC adds 12.67 mil b/d

Saudi Arabia slightly below quota, while Russia just over

UAE crude production surges to 2.74 mil b/d

Iraq under Aug quota but didn't make full compensation

London — OPEC and its allies pumped more crude oil in August, led by surges from Saudi Arabia, Russia and the UAE, according to the latest S&P Global Platts survey, adding more supplies to a fragile market uncertain of the global economy's trajectory.

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OPEC's 13 members produced 24.37 million b/d, a 4% rise from July, while its nine partners, including Russia, added 12.67 million b/d, a 6% increase, the survey found.

The higher volumes were not unexpected as the OPEC+ coalition's record 9.7 million b/d production cut accord, implemented during the depths of the coronavirus crisis in May, had been scheduled to ease to 7.7 million b/d for the rest of the year starting in August. As such, the group achieved 97% compliance with its new quotas in the month, according to Platts calculations.

But the increased production is coming at a time when the rapid recovery of global oil demand appears to be stalling, amid fears of a growing second wave of COVID-19 infections. Brent prices have tumbled in recent days to below $40/b, after weeks of hovering around $45/b.

Many Middle Eastern members had said that they would need extra supplies for electricity generation during a hot August, when air-conditioning units are running at full tilt, and that their exports to the market would not substantially increase.

OPEC kingpin Saudi Arabia, for example, boosted its production by 500,000 b/d month-on-month to 8.95 million b/d, still under its quota, the survey found, with most of the extra barrels consumed in its peaking power plants.

Russia, the largest non-OPEC member of the alliance, likewise had said it expected its additional production to be consumed domestically. It pumped 9.09 million b/d, above its quota by 10,000 b/d, according to the survey.

The UAE, which has traditionally demonstrated strong compliance with its quota, boosted its output to 2.74 million b/d, the survey found, far in excess of its cap. State oil company ADNOC has said it will slash its October term allocations by 30% to make up for the difference.

Making restitution

Other countries that have previously overproduced their quotas are also expected to implement so-called compensation cuts on top of their already committed production cuts, according to the terms of the OPEC+ deal.

However, many of those members failed to fully deliver their compensation that had been pledged for August, according to the Platts survey.

Iraq, a habitual compliance laggard, produced 3.75 million b/d in the month, the survey found -- below its quota of 3.80 million b/d, but still far above its effective quota of around 3.40 million b/d when its compensation cuts are factored in.

The country's oil minister has said it may ask the monitoring committee for a two-month extension on achieving its extra cuts, which were due to be completed by the end of September.

Nigeria, another country whose low compliance has been noted by the coalition, pumped 1.57 million b/d, according to the survey, above its cap of 1.50 million b/d. However, Nigeria says its Agbami grade should be categorized as condensate, which is not subject to OPEC+ quotas.

Platts estimates Nigeria produced 160,000 b/d of Agbami in August. Stripping that out from its figure, would put the country comfortably below its quota, not counting its compensation volumes, which have not been disclosed.

A key OPEC+ monitoring committee, chaired by Saudi Arabia and Russia, will meet online Sept. 17 and is expected to focus its efforts on ensuring countries follow through on their catch-up cuts.

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

OPEC+ PRODUCTION

OPEC-10
AUG
JULY
CHANGE
QUOTA
AUG COMPLIANCE
Algeria
0.86
0.81
+0.05
0.864
102%
Angola
1.22
1.17
+0.05
1.249
110%
Congo
0.29
0.28
+0.01
0.266
59%
Equatorial Guinea
0.12
0.11
+0.01
0.104
30%
Gabon
0.18
0.19
-0.01
0.153
21%
Iraq
3.74
3.77
-0.03
3.804
108%
Kuwait
2.29
2.16
+0.13
2.297
101%
Nigeria
1.57
1.56
+0.01
1.495
78%
Saudi Arabia
8.95
8.45
+0.50
8.993
102%
UAE
2.74
2.47
+0.27
2.590
74%
TOTAL OPEC-10
21.96
20.97
+0.99
21.815
97%
OPEC EXEMPT
Iran
1.95
1.98
-0.03
exempt
exempt
Libya
0.12
0.11
+0.01
exempt
exempt
Venezuela
0.34
0.33
+0.01
exempt
exempt
TOTAL OPEC
24.37
23.39
+0.98

NON-OPEC
AUG
JULY
CHANGE
QUOTA
AUG COMPLIANCE
Azerbaijan
0.59
0.55
+0.04
0.587
98%
Bahrain
0.16
0.15
+0.01
0.168
122%
Brunei
0.08
0.07
+0.01
0.083
116%
Kazakhstan
1.35
1.31
+0.04
1.397
115%
Malaysia
0.48
0.43
+0.05
0.486
106%
Oman
0.72
0.67
+0.05
0.722
101%
Russia
9.09
8.59
+0.50
8.993
95%
Sudan
0.06
0.05
+0.01
0.061
107%
South Sudan
0.14
0.13
+0.01
0.106
-42%
TOTAL NON-OPEC
12.67
11.95
+0.72
12.603
98%
OPEC-10 + NON-OPEC
34.63
32.92
+1.71
34.42
97%

Unit: million b/d

NOTES:

OPEC and its allies in May implemented a 9.7 million b/d production cut accord. The cuts 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, which were given baselines of 11 million b/d.

Mexico exited the deal at the end of June.

OPEC members Iran, Libya and Venezuela are exempt from the deal.

The OPEC+ coalition's next formal meeting is Nov. 30-Dec. 1 in Vienna. A nine-country Joint Ministerial Monitoring Committee will meet online Sept. 17 and monthly thereafter to assess compliance and decide whether to change the level of cuts.

The S&P Global Platts OPEC survey, which has been published since 1988, measures wellhead crude oil production in each member country. In 2020, Platts began estimating production from the non-OPEC members of the OPEC+ alliance.