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The OPEC+ group was falling behind its overall crude oil production target by a massive 2.695 million barrels per day (bpd) in May due to Western sanctions on Russia and capacity constraints at several other producers unable to pump to quotas, a document from OPEC+ seen by Reuters showed on Thursday.
Last month saw a larger gap in the overall production at OPEC+ members compared to the group’s target, according to estimates from secondary sources cited by the OPEC+ document. Compliance with the cuts jumped to 256% n May, up from 220% in April, indicating that the underproduction problem at OPEC+ deepened as the targets were lifted by 432,000 bpd last month.
Russia, the largest non-OPEC producer in the OPEC+ pact, saw its production increase slightly in May compared to April, but it was still well below the Russian target per the deal. Hit by self-sanctioning, sanctions, and now an EU embargo, Russian crude oil production fell in March and April, after the Russian invasion of Ukraine.
Russian crude oil output slightly recovered in May, according to the OPEC+ document seen by Reuters. Russia pumped 9.273 million bpd of crude last month, up from 9.159 million bpd in April. However, Russian production was still way off its target, by as many as 1.276 million bpd below its quota for May. This was the largest underperformance compared to targets among all OPEC+ producers.
Going forward, production from OPEC+ is unlikely to improve too much, especially after the alliance earlier this month decided to accelerate the easing of the cuts and said its July target would be 648,000 bpd higher than in June.
While Saudi Arabia, the United Arab Emirates, and Iraq are likely to meet their respective quotas, Russia and the African OPEC members led by Nigeria and Angola are very unlikely to do so. Sanctions on Russia are affecting its supply, despite high export volumes to India and China, while other producers face a lack of capacity and/or investment, preventing them from reaching their targets.
NB: Charles Kennedy wrote this article for Oilprice.com
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