OPEC Fell Short On Oil Production Target In October

OPEC’s crude oil production rose by 217,000 barrels per day (bpd) to 27.453 million bpd in October, but still fell short of the cartel’s share of the 400,000-bpd total output hike of the OPEC+ group.

Under the OPEC+ deal, the ten OPEC members bound by the OPEC+ pact should be raising their combined production by 254,000 bpd each month.

Yet, estimates from secondary sources in OPEC’s Monthly Oil Market Report (MOMR) published on Thursday continued to show what analysts, tanker-tracking firms, and previous OPEC monthly reports showed: the cartel has been undershooting its collective production quota—mostly because of a lack of capacity at some members to pump crude to their respective quotas.

While OPEC’s top producer and the world’s largest oil exporter, Saudi Arabia, pumped nearly in perfect alignment to its quota and raised crude production by 110,000 bpd, several African members not only fell short of their quotas, but they also saw their respective output drop in October compared to September.

Saudi Arabia’s crude oil production rose to 9.759 million bpd, and the Kingdom was quite naturally the producer with the largest monthly increase. But Nigeria, Gabon, and Equatorial Guinea saw their output decline last month. The steepest drop was in Nigeria, whose production fell by 45,000 bpd to 1.354 million bpd, per OPEC’s secondary sources. Nigeria’s output was more than 200,000 bpd below its cap of 1.6 million bpd. Nigeria has been struggling to reach its quota while frequent force majeure events have also contributed to the much lower production than allowed under the OPEC+ deal.

At the end of October, Shell’s Nigerian unit declared force majeure on loadings of Bonny Light crude, following the shutdown of the Nembe Creek Trunk Line (NCTL) by the operator, Aiteo Exploration and Production Limited.

Elsewhere among African members, the combined crude production in Gabon and Equatorial Guinea fell by 30,000 bpd in October from September.

The OPEC members that raised their respective production last month included all three producers exempted from the OPEC+ cuts—Venezuela, Iran, and Libya. Venezuela boosted its oil production by 57,000 bpd per secondary sources in the OPEC report. Iran and Libya saw smaller increases of 10,000 bpd and 15,000 bpd. Since production at those three is not part of the OPEC+ deal, the 217,000-bpd output increase of OPEC-13 becomes even smaller when restricted to the 10 members part of the OPEC+ pact.

By Tsvetana Paraskova for Oilprice.com

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