The OPEC+ coalition of producers achieved in July a compliance rate of 159 percent with the oil production cuts which the partners extended last month into March 2020 in their efforts to erase the glut and prop up oil prices.
The Joint Ministerial Monitoring Committee (JMMC) of the OPEC and non-OPEC countries that are part of the deal said on Tuesday that the July 2019 overall conformity level of 159 percent was 22 percentage points higher than in June. The partners have achieved an average compliance level of 134 percent since the beginning of this year, and this is the highest to date in 2019, the JMMC said in a statement after reviewing the monthly report drafted by its Joint Technical Committee (JTC), as well as recent developments in the oil market, and the near-term prospects for this year and next.
“This high level of overall conformity has offset uncertainty in the market due to ongoing economic growth worries,” OPEC and the JMMC say, noting the importance of the production cuts in supporting market stability.
According to OPEC, the production cuts, combined with “ongoing healthy oil demand so far”, have “arrested global oil inventories growth and should lead to significant draws in the second half of the year.”
OPEC’s efforts to lift the prices, however, have not been successful over the past two months as worries about global oil demand have outweighed the bullish factor that the OPEC+ production has been dropping. Related: The Real Reason Why US Oil Production Has Peaked
Within OPEC alone, crude oil production fell by another 246,000 bpd in July compared to June, as Saudi Arabia deepened its cuts, as U.S. sanctions further trimmed output in Iran and Venezuela, and as an outage restricted production in Libya, OPEC’s Monthly Oil Market Report (MOMR) showed two weeks ago.
The Saudis have vowed to keep production well below 10 million bpd—although their quota is 10.3 million bpd—and exports at below 7 million bpd, aiming to tighten the market as demand growth weakens with gloomy macroeconomic prospects.
Iran and Venezuela, both under U.S. sanctions, also saw their production down, while crude oil production in Libya, one of the wildest cards in OPEC in terms of production consistency amid security concerns, fell by 42,000 bpd to 1.078 million bpd last month, after its largest oil field experienced two outages in two weeks.
By Tsvetana Paraskova for Oilprice.com
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