A Reuters survey showed on Friday that OPEC did not commit in June to the increase in oil production it pledged under an agreement with allies, as involuntary declines in Libya and Nigeria erased the impact of supply increases by Saudi Arabia and other major producers.
The survey found that the Organization of the Petroleum Exporting Countries (OPEC) pumped 28.52 million barrels per day in June, down 100,000 barrels per day from May’s revised total. OPEC had planned to increase June production by 275,000 barrels per day.
OPEC +, which includes OPEC countries and other allies from non-OPEC producing countries led by Russia, has begun to reverse a production cut that was implemented in 2020 due to the pandemic, but many countries are facing difficulties in implementing this. And OPEC +, at a meeting held on Thursday, stuck to the previously scheduled increase in production in August.
The agreement between the countries called for an increase of 432,000 barrels in June from all OPEC + countries. The share of the ten OPEC countries covered by the agreement, of that increase is approximately 275,000 barrels per day. But the survey showed an increase in supplies from the ten countries by only 20 thousand barrels per day.
According to surveys conducted by Reuters, production did not meet the pledges to increase between October and April, with the exception of February, when many producing countries lack the production capacity to allow more pumping due to a lack of investment, a trend exacerbated by the pandemic.
As a result, the 10 OPEC members are pumping much less than the production agreement called for. OPEC’s commitment to production cut pledges reached 253% in June, according to the survey, up from 178 in May.
Libya and Nigeria
The biggest drop came from Libya, as production fell by 170,000 barrels per day, as unrest continued to curb the country’s production of crude. Libya is one of the member states exempted from making a voluntary production cut.
The second largest drop came from Nigeria, at 80,000 barrels per day, as outages and maintenance work limited production. Refinitiv figures estimated that June exports decreased by at least 100,000 barrels per day, and two other sources in the survey that monitor flows shared this estimate.
Iraqi production also declined, with sources in the survey indicating a decline in exports.
Saudi Arabia, the United Arab Emirates and Kuwait combined added 130,000 bpd. The survey showed that Saudi Arabia’s production was less than its quota by more than 100,000 barrels per day.
Production rose slightly from Iran and Venezuela, which are also among the countries exempted from the voluntary cut.
The Reuters survey aims to track the supply in the market. It is based on freight data provided by external sources and crude flow data from Refinitiv Eikon as well as information from tanker monitoring companies such as Petro-Logistics, as well as information provided by oil company sources, OPEC and consultants.