Opec+ crude output above target again

The alliance overshot its output target in March, with serial overproducers Iraq and Kazakhstan again exceeding their pledges, writes Aydin Calik

Opec+ crude output was once again above target in March, as serial overproducers Iraq and Kazakhstan continued to exceed their pledges. Kuwait and Gabon were last month's other notable overproducers.

March production from members subject to targets rose by 70,000 b/d to 34.59mn b/d, according to Argus estimates, leaving the alliance 270,000 b/d above its goal (see table). The gap would have been wider were it not for a war-related decline in output from non-Opec members Sudan and South Sudan.

Opec+ has been cutting production since November 2022 in a self-described attempt to support and balance the oil market. A new round of "voluntary" reductions by several members came into force in January this year and is due to run until the end of June.

The group is not relaxing its stance on production discipline, despite front-month Ice Brent crude futures moving above $90/bl for the first time in around six months in early April. Earlier this month, Opec's Joint Ministerial Monitoring Committee, which oversees compliance with the coalition's crude production cuts and studies market dynamics, said members that overshot targetsin the first quarter of this year will submit plans to compensate. "Participating countries with outstanding overproduced volumes for the months of January, February and March will submit their detailed compensation plans to the Opec secretariat by 30 April 2024," the secretariat said.

The nine Opec members bound by targets were 400,000 b/d above their combined production pledge in March, while the nine non-Opec members of the alliance were 130,000 b/d below.

Iraq reduced output by 50,000 b/d in March after burning less crude for power generation, but it was still 180,000 b/d over its 4mn b/d target. To allay concerns, Baghdad last month pledged to drive its crude exports down to 3.3mn b/d, although state-owned marketer Somo reported exports of 3.42mn b/d for March.

Like Iraq, Kazakhstan has vowed to comply with its pledges and compensate for overproduction in January and February, but it made no progress last month — output was unchanged at 1.59mn b/d, which was 120,000 b/d above target.

Wide of the mark

Others that overshot the mark last month include Kuwait, where production rose by 40,000 b/d to 2.51mn b/d, leaving the country 100,000 b/d above its pledge. Kuwait overproduced by around 70,000 b/d on average in the first quarter. Fellow Opec member Gabon exceed its March quota by 80,000 b/d. Saudi Arabia and the UAE, which have shouldered much of the burden of the group's collective cuts over the past 16 months, were slightly above target last month too, after increasing output by a respective 30,000 b/d and 20,000 b/d.

Russian crude production rose by 30,000 b/d to 9.44mn b/d, just 10,000 b/d shy of its target. Drone attacks and refinery maintenance resulted in as much as 1.1mn b/d of crude processing capacity being off line for repairs last month, freeing up more crude for export — shipments hit an 11-month high in March. Energy minister Nikolai Shulginov said on 3 April that all recently damaged refineries would be fully repaired by June or earlier — implying that there could be excess crude for export this month and in May.

Fellow non-Opec producers Sudan and South Sudan were both 40,000 b/d below their quotas last month as the impact of Sudan's ongoing civil war began to be felt. South Sudan, which is entirely reliant on its northern neighbour to get its oil to international markets, saw its production nearly halve to around 80,000 b/d because of a blocked pipeline.