OPEC+ Sees Production Decline Amid Challenges in Libya and Kazakhstan

In August, OPEC+ crude output fell by 300,000 b/d to 40.73 million b/d, primarily affected by maintenance in Kazakhstan and outages in Libya. Despite the decline, member countries produced 327,000 b/d above their quotas. The overall overproduction remains a critical concern amidst declining oil prices, prompting OPEC+ to delay plans to rollback production cuts.

In August, OPEC+ crude production witnessed a decline of 300,000 barrels per day (b/d), reaching a total output of 40.73 million b/d. This reduction is primarily attributed to maintenance activities in Kazakhstan and production outages in Libya, as highlighted by the Platts OPEC+ survey conducted by S&P Global Commodity Insights on September 9. Despite this overall decrease in output, member countries with production quotas collectively produced 327,000 b/d above their assigned targets, though this represents a reduction in overproduction from the 437,000 b/d seen in July. The challenge of overproduction remains a significant concern for OPEC+, especially in light of declining oil prices amid uncertain demand and competitive production levels from non-member countries. The OPEC segment of the group recorded a decrease in output of 120,000 b/d, totaling 26.77 million b/d, while its non-OPEC partners curtailed production by 180,000 b/d to 13.96 million b/d. Libya’s output was particularly impacted, falling by 160,000 b/d to 990,000 b/d due to political disputes leading to production shutdowns. Kazakhstan experienced a significant decline as well, with a 120,000 b/d reduction to 1.45 million b/d due to maintenance at its Tengiz oil field. Iraq maintained its production levels at 4.33 million b/d in August, surpassing its quota of 3.93 million b/d. Russia, as the largest non-OPEC producer, reduced its output by 50,000 b/d yet remained above its quota. Meanwhile, Saudi Arabia’s monthly production remained unchanged at 8.99 million b/d. This overproduction trend has contributed to a decline in oil prices throughout the summer months, with Dated Brent assessed at $73.025 per barrel on September 6, down from early April highs exceeding $93 per barrel. In response to the continued pricing pressures, OPEC and its allies postponed plans to gradually reduce voluntary production cuts, originally set to begin in October, by two months to December. The Joint Ministerial Monitoring Committee, responsible for overseeing the OPEC+ agreement, is scheduled to convene on October 2, with a full OPEC+ ministerial meeting planned for December 1 in Vienna. The surveying process captures wellhead production data from oil industry officials, traders, analysts, as well as utilizing proprietary shipping, satellite, and inventory data.

The Platts OPEC+ survey typically measures production levels within the member states, providing insights into the dynamics of global oil production and pricing. OPEC+, a coalition of oil-producing nations, aims to manage oil output and influence prices through collective agreements on production quotas. Recent trends have revealed challenges in maintaining these quotas amidst fluctuating demand and growing production from non-member nations, prompting concerted efforts within the organization to stabilize both output and market prices, particularly during periods of economic uncertainty.

In summary, the decline in OPEC+ crude production by 300,000 b/d in August serves as a reflection of maintenance and geopolitical challenges faced by member nations. The group continues to grapple with the issue of overproduction, which is impacting global oil prices. With ongoing efforts to manage production levels and upcoming meetings to reassess strategies, the landscape of oil production dynamics remains uncertain, further influenced by external economic factors.

Original Source: www.spglobal.com