OPEC+ increases oil output despite promises to cut

The OPEC+ group boosted oil production in July and widened the glut above its default target as the three producers that have pledged to offset overruns continued to pump well above their respective ceilings, according to the Platts OPEC+ survey from S&P Global Commodity Insights.

OPEC+ saw total crude output rise by 160,000 barrels per day (bpd) last month compared to June to 41.03 million bpd, the Platts survey found.

That is 437,000 bpd above the overall target for July and a jump from the 229,000 bpd overproduction in June, according to the survey.

OPEC Iraq and non-OPEC producers Kazakhstan and Russia pledged to offset their overproduction in previous months.

OPEC’s secretariat said last month it had received compensation plans from Iraq, Kazakhstan and Russia for their overproduced volumes from January to June 2024.

Cumulative overproduction in those six months was about 1.184 million bpd for Iraq, 620,000 bpd for Kazakhstan and 480,000 bpd for Russia, OPEC said.

Iraq and Kazakhstan planned to begin offsetting in July with an additional cut of 70,000 bpd from Iraq and 18,000 bpd from Kazakhstan.

Russia’s plan calls for Moscow to start compensating in October 2024 and to offset most of its overproduction in the months of March to September 2025.

Russian Deputy Prime Minister Alexander Novak said in late July that there was no discord between Russia and OPEC+ over Moscow’s recent poor compliance with the group’s production cuts.

Russia’s Energy Ministry also said the country remains fully committed to the OPEC+ deal. Russia exceeded production volumes in June, but production has fallen every month since April, according to estimates from independent sources approved by the OPEC+ deal, the ministry said.

OPEC-only crude output was estimated by Reuters monthly poll at 26.70 million bpd in July, up 100,000 bpd from June, due to higher supply from Saudi Arabia and small increases from other producers including Iraq .

By Charles Kennedy for Oilprice.com

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