OPEC+ output up to 41.25 mil b/d in March, no progress on compliance: Platts survey

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OPEC+ crude output in March was up slightly month on month, as several producers continued to exceed their quotas, the Platts OPEC+ survey by S&P Global Commodity Insights found.

Overall, the group produced 41.25 million b/d of crude in March, up 40,000 b/d on February levels despite efforts made by Saudi Arabia to enforce compliance.

This included an 80,000 b/d increase in OPEC production to 26.66 million b/d, offset by a drop in output by its allies of 40,000 b/d. March was the third month of the group's latest voluntary production cuts, which were supposed to take approximately 700,000 b/d off the market in the first quarter of 2024.

The additional OPEC+ production has come ahead of crude prices breaking above the $90/b level. Platts assessed Dated Brent at $92.20/b on April 8, up from $87.50/b on March 1 -- the last assessment before the voluntary cut extension was announced.

Higher prices coupled with greater geopolitical risk and OPEC+'s continued cuts could signal a stronger than anticipated demand, and stimulate production beyond OPEC+.

S&P Global Commodity Insights forecasts that by late 2024 and into early 2025 strong oil supply gains in non-OPEC+ countries and decelerating demand growth will lead to weaker fundamentals.

Above target

Several countries produced above target in March, including Iraq and Kazakhstan, which have said that they would compensate for overproduction in early 2024.

The survey showed that OPEC+ countries implementing cuts produced 165,000 b/d above quota in March, representing a compliance rate of 97.9%, driven primarily by OPEC members rather than their Russia-led allies. The alliance also produced above target in January and February, with compliance rates of 96.5% and 97.8% respectively.

Compliance is already emerging as a source of contention within the group. Most recently overproducers were forced to agree to submit detailed compensation plans by April 30, OPEC said in a statement released after the last meeting of the Joint Ministerial Monitoring Committee overseeing the alliance's output.

The nine OPEC nations subject to quotas produced 320,000 b/d over their targets in March, including excess output of 280,000 b/d in Iraq, 40,000 b/d in the UAE and 50,000 b/d in Gabon.

Meanwhile non-OPEC countries produced 165,000 b/d below their collective quota, even with excess output in Kazakhstan of 92,000 b/d.

Iraq said March 18 it would cut exports to 3.3 million b/d -- around 134,000 b/d below February levels -- until the end of June. Other overproducers have yet to provide details on how they will implement compensation promises.

The group's biggest producers Saudi Arabia and Russia saw little change to production volumes month on month. Saudi Arabia increased output by 10,000 b/d to 8.99 million b/d, and Russian output fell by 10,000 b/d to 9.42 million b/d.

OPEC members Iran, Libya and Venezuela and non-OPEC Mexico do not have quotas under the group's supply accord.

Future plans

OPEC+ plans to continue with its current policy of aggressive cuts until at least the end of the first half of 2024. Producers with voluntary cuts announced March 3 plans to extend them until the end of June.

Most producers' Q2 quotas are unchanged, but Russia plans to transition from a supply to a production cut. If it meets its target, production will fall to the same level as Saudi Arabia's in June.

In addition to its compliance challenge, the alliance is navigating rising non-OPEC+ crude supply, including from the US, Canada and Guyana, economic uncertainty, and heightened geopolitical risks, particularly related to conflicts in Europe and the Middle East.

Fears over a military confrontation between Israel and Iran, as well as recent attacks on Russian oil refineries by Ukraine, have supported crude prices in recent days.

The next OPEC+ meetings are scheduled for June 1. The group previously announced plans to adjust quota baselines in June, based on current capacity as estimated by external sources, which could cause further friction. The previous round of baseline talks led to Angola quitting OPEC after 16 years.

The Platts survey measures wellhead production and is compiled using information from oil industry officials, traders and analysts, as well as by reviewing proprietary shipping, satellite and inventory data.

Unit: million b/d

Source: Platts OPEC+ survey by S&P Global Commodity Insights