95% current compliance with production cut targets
OPEC released its Monthly Oil Market Report today, outlining the state of the oil trade and the effects of the group’s output cuts. The group’s production decreased by 79.1 MBOPD in August, bringing it closer to full cut compliance.
Nigeria up significantly, Libya down
Nigeria was the only country to significantly increase production, adding 138.3 MBOPD in August.
The African producer is now producing above 1.8 MBOPD for the first time in over a year. Like Libya, Nigeria is currently exempt from the cut agreement, to allow the country to restore production to historically standard levels. Other OPEC members have suggested that Nigeria may be brought in to the agreement after its production stabilizes at 1.8 MBOPD, so upcoming OPEC meetings may focus on this issue.
Production in most other countries fell, with Libyan production dropping by the largest amount. Supply disruptions once again plagued the North African producer, which produced 890 MBOPD in August, 112.3 MBOPD less than in July. Groups regularly attempt to take over pipelines and other facilities, which forces production at the Sharara and other major fields to stop temporarily. Production had been improving in recent months, rising from an average of 390 MBOPD in 2016 to 1,003 MBOPD in July, but is still far below the 1.6 MMBOPD the country was producing before the 2011 revolt.
Production down across the board
Several other countries also decreased production in August, greatly helping cut compliance. Gabon, Venezuela, Iraq, UAE and Saudi Arabia each significantly decreased production, dropping a combined 117.8 MBOPD.
From a compliance standpoint, Iraq’s move is most significant. The country has consistently produced far in excess of its obligations, and is one of the main reasons current output is above the level prescribed in the current cut agreement. This month’s decrease of 23.1 MBOPD is not enough to bring the country into compliance, but is a significant step in that direction.
OPEC v. U.S. Shale – Graph: EnerCom Analytics
Based on Bloomberg data, current OPEC production levels are at 95% of the target, the highest compliance level since May.
