OPEC+ experiences mixed production results in May due to global challenges

OPEC+
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According to a survey by Platts from S&P Global Commodity Insights OPEC+ saw mixed production changes among its members in May, reports Kazinform News Agency correspondent.

Nine OPEC members increased their crude oil output by 100,000 barrels per day (b/d), primarily due to higher production in Nigeria and Iraq, pushing their total output 320,000 b/d above their targets. On the other hand, non-OPEC allies such as Russia, Kazakhstan, and Mexico reduced their production, contributing to a 40,000 b/d month-on-month overall drop in the alliance’s production to 41 million b/d.

These adjustments come as OPEC+ struggles to stabilize the oil market amid increasing production in non-OPEC+ countries like the US, Canada, and Guyana, economic challenges in China, and internal disagreements over quota compliance.

Notably, Russia and Kazakhstan are working towards better compliance by each reducing their output by 50,000 b/d, though still exceeding their targets.

“Russia, which has converted an export cut into a production one, remains 191,000 b/d above its quota. Kazakhstan's reduction followed maintenance at its critical Tengiz development,” the survey quotes.

Amid these dynamics, Nigeria and Iraq notably boosted their outputs, even as Nigeria faces ongoing challenges like oil theft. Due to group modifications and internal competitiveness, the UAE and Gabon both marginally surpassed their goals. Meanwhile, geopolitical tensions also influenced production decisions.

“Iraq boosted production by 40,000 b/d to 4.28 million b/d – 280,000 b/d over its current target - despite agreeing in May to compensate for overproduction.” The Platts survey estimates current oil output in Iraq's Kurdistan region, over which Baghdad has scant control, at 210,000 b/d.

Mexico, which is not subject to a quota, also helped reduce OPEC+ output, dropping 50,000 b/d due to declines in ageing fields, while damage to South Sudan's only export pipeline through Sudan kept tens of thousands of barrels offline.

The survey highlighted that OPEC+ remains a key player in the global oil market, controlling about 40% of the world's production and facing ongoing pressures from market dynamics and internal quota compliance issues. The next major OPEC+ meeting is scheduled for August 1, where further decisions on production adjustments will be discussed.

“Overproducers have until the end of June to submit plans to offset heightened output in the first half of the year. The OPEC+ alliance – formed in 2016 to wrest a larger market share – will then hold its next Joint Ministerial Monitoring Committee, which oversees the alliance's output, on Aug. 1,” the survey concludes.

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