OPEC’s latest oil supply cuts stalled as Iraq which has often flouted the group’s agreements produced above its quota for a second month, according to Bloomberg.
Baghdad reduced output by only 14,000 barrels a day to an average of 4.2 million barrels a day in February, the second month of OPEC’s new supply accord, according to a report from the group. That left the country’s production roughly 200,000 barrels a day over its agreed limit.
Led by Saudi Arabia, the Organization of Petroleum Exporting Countries and its allies have pledged to reduce supplies in order to stave off a global surplus and shore up crude prices. The measures have helped buoy Brent futures above $80 a barrel while world demand growth slows and rival output from the Americas climbs.
Earlier this month, the OPEC+ coalition agreed to extend its restraints to the middle of the year. Members such as Saudi Arabia, the United Arab Emirates, Kuwait and Algeria have been adhering to their quotas, according to the report from OPEC’s Vienna-based secretariat on Tuesday. Yet the latest data show that implementation is still incomplete as a result of Iraq’s non-compliance.
Iraqi Oil Minister Hayyan Abdul Ghani told reporters last week that the country is adhering to its assigned target of 4 million barrels a day, and has committed to compensating for any deviation with additional cutbacks. Nonetheless, Baghdad has a long history of breaking its OPEC+ pledges, as it seeks revenue to rebuild a shattered economy.
Others in the wider 22-nation OPEC+ alliance are showing a lack of discipline.
Russian President Vladimir Putin needs to maintain revenue as he continues to wage war on neighboring Ukraine, and his country has been given special dispensation to make its OPEC+ reductions in a combination of production cuts and curbs to exports of crude and refined products. Yet the latest tanker tracking data show Moscow struggling with the export restraints, its seaborne crude shipments surging in the week ended March 10 to the highest level this year.
Russia has pledged to bolster its participation in the OPEC+ agreement next quarter by focusing more on crude production cutbacks, while easing the export curbs.
Kazakhstan has acknowledged producing above its quota and, like Iraq, promised to make up for this with extra cuts.
OPEC’s report kept forecasts for world oil supply and demand largely unchanged for this year and next, projecting that consumption will increase by a “robust” 2.2 million barrels a day in 2024 to a record 104.5 million a day.
The growth rate is considerably higher than expected by many forecasters and traders, including Saudi Arabia’s state producer, Aramco, which predicts that demand will increase by 1.5 million barrels a day this year. The International Energy Agency, which advises major consuming nations, is due to publish the latest monthly update of its supply and demand estimates on Thursday.
Key OPEC+ members are due to hold an online meeting early next month to review market conditions, and ministers from the whole alliance are scheduled to meet at its Vienna headquarters at the start of June.