Opec+ cumulative oversupply stands at 2.33mn b/d

Opec+ countries required to compensate for past overproduction managed to deliver a combined 344,000 b/d of additional crude output cuts last month, leaving them with a cumulative excess of 2.33mn b/d to clear by the end of the year.

The 2.33mn b/d figure — outlined in a draft Opec+ document seen by Argus — is accrued by adding the individual monthly volumes by which non-compliers surpassed their respective quotas over the May-September period. They have until the end of the year to compensate for their previous overproduction with extra cuts. An even monthly distribution of the compensatory output reductions would deepen the group's overall production cut to 8.46mn b/d in October-December from the official target of 7.7mn b/d.

Opec+ deal participants had accrued 2.375mn b/d of cumulative overproduction during May-August, according to a previous Opec+ document . The group assessed its overall compliance with the 7.7mn b/d cut at 102pc last month. But including compensatory cuts, the compliance rate dropped to 97pc.

The cumulative 2.33mn b/d of remaining overproduction raises the question of whether the coalition can achieve its goal to fully compensate for past excesses by the end of the year. The group has already pushed back the compensation mechanism's deadline once — it had initially been due to expire at the end of September . UAE oil minister Suhail al-Mazrouei said earlier this week that it is unlikely that the deadline would be pushed back again, while Opec secretary-general Mohammed Barkindo said today that it is "premature" to predict whether it will be extended into 2021.

Meanwhile, today's meeting of the Opec+ Joint Technical Committee (JTC), which studies market conditions, considered an additional scenario in which oil demand weakens and Libyan production grows, according to an Opec delegate. The next JTC meeting has been scheduled for 16 November.

By Ruxandra Iordache and Nader Itayim

September compliance Without compensation (%) With compensation (%) Cumulative overproduction (&#39;000 b/d) Algeria 105 105 0 Angola 103 96 95 Congo 66 39 168 Equatorial Guinea 107 84 38 Gabon 15 15 226 Iran na na na Iraq 114 92 578 Kuwait 101 101 0 Libya na na na Nigeria 116 95 226 Saudi Arabia 102 102 0 UAE 108 108 132 Venezuela na na na Total Opec-10 105 98 1,463 Azerbaijan 92 90 14 Bahrain 114 114 0 Brunei 115 115 22 Kazakhstan 106 106 147 Malaysia 126 126 0 Mexico na na na Oman 102 102 0 Russia 96 96 430 Sudan 101 101 8 South Sudan 148 148 246 Total non-Opec 97 97 868 Total Opec+ 102 97 2,330 Source: Opec document

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