The gap between OPEC members production their quotas has widened

The Organization of The Petroleum Exporting Countries (OPEC) its Allies are still failing to meet their increasing production targets, falling 700,000 b/d short of meeting their common production quotas in January, according to a newly released S&P Global Platts survey.

The survey found that output the 13 MEMBERS of the OPEC group rose 150,000 BPD December to 28.19 million BPD, while output the nine non-OPEC members, led by Russia, rose a meagle 10,000 BPD to 13.99 million BPD.

In total, 14 of the 18 members missed their quota targets, leaving OPEC with a 120.8 per cent compliance rate.

Supply disruptions in several OPEC countries, including Venezuela, Kazakhstan, Libya Iraq, limited the group's output growth despite strong growth in its core Gulf members, Russia Nigeria.

The group's difficulty in maintaining a monthly increase of 400,000 BPD has prompted a collective crusade key consumers including the United States India, who say the group should free up spare capacity to bring prices down recent seven-year highs.

However, OPEC officials say oil prices have gone beyond levels justified by current market fundamentals, driven by rising geopolitical risks in Ukraine elsewhere.

OPEC officials will meet on March 2 to discuss production targets for April.

Many of the underperforming countries, they say, are just temporary setbacks that will soon be turned around.

One such example is Nigeria, which has suffered a number of operational technical problems over the past year. The Platts survey showed Nigeria's oil production grew by the most among OPEC members in January, hitting a nine-month high.

Nigeria, Africa's largest oil producer, pumped 1.57 million barrels per day (BPD) in January, up 190,000 BPD December, helped by a rebound in Forcados crude, a key export grade. Even so, it fell short of its quota of 1,683,000 b/d.

OPEC leaders Saudi Arabia Russia each pumped 10.08 million BPD in January, also below their quota target of 10.122 million BPD.

Platts forecasts an additional 32,500 barrels a day of Russian oil production by the end of 2022, even that would fall well short of the 11 million barrels a day target in the OPEC agreement.

Platts said in a recent report that Russia's "production growth in 2022 will keep pace with quota increases under the current framework agreement."

Meanwhile, Saudi Arabia's crude exports rose modestly in January domestic crude processing looks set to increase.

Saudi production rose by 130,000 b/d, the survey found.

** Production outage has reappeared **

Venezuela, which has been exempted production quotas, experienced a significant slowdown in production, with the survey finding that venezuela's production fell by 120,000 b/d in January to 630,000 b/d.

Imports of condensate Iran have helped revive production in the Latin American country in recent months. But the expected January shipment did arrive, forcing Venezuela to shut down production, market participants said.

Libya, another exempted member, saw its output slip below 1 million BPD for the first time since October 2020 due to problems in its southwestern eastern fields. While the country's oil production rebounded sharply in the second half of January, bad weather also cut exports.

Iraqi production has also been hampered by bad weather technical problems. Iraq produced 4.26 million barrels a day in January, down 50,000 barrels a day the previous month, the survey found.

Meanwhile, production in non-OPEC Kazakhstan fell by 80,000 BPD as anti-government protests in early January disrupted some upstream operations, including the flagship Tengiz field.

** Iran Nuclear Deal talks **

Iran, which the survey found produced 2.52 million barrels a day, could become a key source of crude on the market as talks to restart a nuclear deal gather pace in Vienna.

A deal to lift sanctions on Iranian oil exports could add 1.3 million barrels a day more to Iranian supplies.

Before the U.S. imposed sanctions on Iran in 2018, Iran's oil production was high at 3.83 million b/d.

Platts estimates that, without a deal, 96 per cent of the world's remaining 1.8m b/d of spare capacity by June will be in Saudi Arabia the United Arab Emirates.

"The reduction in market buffers increases the importance of the Iran nuclear negotiations," said Paul Sheldon, chief geopolitical consultant at Platts Analytics.

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Source: International Petroleum Network

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