London — OPEC slashed its crude output in June to a three-decade low, according to an S&P Global Platts survey, as the bloc and its allies, including Russia, continued their campaign to tighten the oil market in its emergence from the depths of the coronavirus crisis.
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OPEC's 13 members pumped 22.31 million b/d, the organization's lowest collective output since September 1990, when the launch of the first Gulf War nearly wiped out crude oil production in Iraq and Kuwait, the survey found.
Including its 10 partners in a historic supply accord, the alliance known as OPEC+ delivered 106% of its committed production cuts, according to Platts calculations, a rise from May's 85%. The combined output of the 20 OPEC and non-OPEC countries with quotas under the deal was 10.32 million b/d below their late 2018 reference levels, meaning the coalition took more than 10% of pre-pandemic oil supply off the market.
The drastic cuts demonstrate how urgently OPEC+ members, who depend greatly on oil revenues to fund their budgets, are striving to prevent another collapse in prices.
But as the global economy takes tentative steps to recovering from the coronavirus pandemic, driving increases in oil demand, some delegates have said they are expecting an easing of the quotas in August as scheduled.
The 9.7 million b/d production cut accord runs through July, after which the cuts roll back to 7.7 million b/d. A nine-country Joint Ministerial Monitoring Committee co-chaired by Saudi Arabia and Russia, the coalition's two biggest members, is scheduled to meet online July 15 to review market conditions.
Pressure to perform
OPEC's core Gulf members led the way on compliance in June, making additional voluntary cuts, while Iraq and Nigeria made significant progress toward complying with their quotas, the survey found.
Saudi Arabia took its production down to 7.58 million b/d, according to the survey, its lowest since June 2002, as the OPEC kingpin mostly made good on its pledge to hold output to 1 million b/d below its 8.49 million b/d quota in June. The kingdom and its Gulf allies the UAE and Kuwait are not expected to maintain those extra cuts in July.
Russia, which has an identical 8.49 million b/d quota, pumped just above that, at 8.50 million b/d, the survey found.
Iraq, which has been the target of ire by its OPEC+ counterparts for its historic non-compliance, made a big reduction in its output to 3.70 million b/d, a nearly five-year low. While that remains above its quota of 3.59 million b/d, the country has pledged to make up for its overproduction later this summer with extra cuts.
Nigeria has made the same pledge, with its June production averaging 1.58 million b/d, above its cap of 1.41 million b/d, according to the survey.
Several other African countries also breached their quotas and likely will face pressure at the JMMC meeting to improve their performance.
The deal exempts Iran, Venezuela and Libya from the cuts.
Heavily sanctioned Iran slumped to 2.00 million b/d, while Venezuela, also under stringent US sanctions, saw its production collapse to 280,000 b/d, just over half of its May output, as its operations with international joint venture partners nearly ground to a halt.
Libya saw a slight uptick to 100,000 b/d, the survey found, but remains extremely volatile because of civil conflict.
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.
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.
The OPEC+ coalition's next formal meeting is November 30-December 1 in Vienna. A nine-country Joint Ministerial Monitoring Committee will meet online July 15 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