OPEC+ Oil Production Is 1Million Bpd Lower Than Target Level

…Compliance with OPEC+ output cuts jumps to 136% in February.

…For more than seven months now, OPEC+ has actually added lower volumes to the market than the projected 400,000 bpd per month increases.

The OPEC+ group continues to severely underperform in its oil production levels compared to the target in the pact, with February output at more than 1 million barrels per day (bpd) below the collective quota and compliance rate jumping to 136 percent, Reuters reported on Friday, quoting two sources.

In January, the overall compliance rate at OPEC+ producers was 129 percent, also indicating that the members of the pact haven’t been able to pump to their collective quotas. The compliance rate has been steadily rising in recent months—meaning that the gap between nameplate total quota and actual production continues to rise. For example, compliance in December 2021 was at 122 percent, and the compliance rate stood at 117 percent in November.

For more than seven months now, OPEC+ has actually added lower volumes to the market each month than the 400,000 bpd nominal monthly increase announced in each of the OPEC+ meetings since August 2021.

The biggest oil-consuming nations, including the United States, as well as the International Energy Agency (IEA), have been calling on OPEC+ for months to boost supply faster to help tame soaring oil prices and narrow the widening gap between the group’s quotas and the much lower actual supply to the market.

Africa’s OPEC members, mostly big producers Angola and Nigeria, have struggled to raise their production because of a lack of investment and capacity. Other producers cannot raise output too much, either. The only ones with enough spare capacity to meaningfully add to the OPEC+ production are OPEC heavyweights Saudi Arabia and the United Arab Emirates (UAE).

However, neither the Saudis nor the UAE has stepped forward to fill in the widening gap in global oil supply, which is set to become much wider after Russia’s invasion of Ukraine that led to buyers’ “self-sanctioning” of Russian oil.

“The OPEC+ alliance agreed on 2 March to stick with a modest, scheduled output rise of 400 kb/d for April, insisting no supply shortage exists. Saudi Arabia and the UAE – the only producers with substantial spare capacity – are, so far, showing no willingness to tap into their reserves,” the IEA said in its Oil Market Report earlier this week.

NB: Tsvetana Paraskova wrote this article for Oilprice.com