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OPEC+ members complied almost completely with their production cut quotas last month, an unnamed source from the extended cartel told Bloomberg.
At 99 percent, according to the source, the compliance level was based on preliminary estimated, to be reviewed tomorrow by the Joint Technical Committee of the group.
OPEC+ agreed to cut 7.2 million bpd in combined production in January, in what was widely seen as a compromise decision for aggressive cutters like Saudi Arabia and more reluctant ones like Russia, which proposed adding 500,000 bpd to the group’s production each month between January and April. For February and March, the cartel agreed to keep production cuts at 7.2 million bpd.
This may change after tomorrow’s meeting but is not very likely. Global demand has been on the mend but so has supply. Therefore, chances are that OPEC+ will stick to its current production cut levels, with Saudi Arabia unilaterally cutting an additional 1 million bpd to keep prices higher.
Meanwhile, however, OPEC’s overall oil production rose in January, according to a Reuters survey, for the seventh month in a row. That’s despite Saudi Arabia’s deep cuts and Iraq’s compensatory output reductions that the country said it would implement in January and February to make up for its non-compliance last year.
“The increase is natural with the higher production ceiling from January,” one OPEC delegate told Reuters.
Interestingly enough, the biggest additions to OPEC’s total for January came from Saudi Arabia and Iraq despite their commitments, the survey found. The third-largest output growth came from Iran, which is ramping up both production and exports in anticipation of the Biden administration lifting sanctions.
At the same time, Nigeria and Lybia saw lower output due to internal problems. Nigeria had to declare force majeure on exports of the Qua Iboe blend after a fire erupted at the export terminal and Libyan oil finds itself once again a bargaining chip in the salary dispute between the Petroleum Facilities Guard and the government.
Now Iraq has said it will cut an additional 250,000 bpd from December 2020 levels in January and February to compensate for excess production last year. This would make its total 3.6 million bpd.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.