Most are hitting their targets, but persistent overproducers and target-exempt members are making the group's task that much harder, writes Aydin Calik
Most Opec+ members produced at or near their targets in February, but Iraq and Kazakhstan once again significantly exceeded their pledges.
Production rose by 80,000 b/d to 34.62mn b/d last month, Argus estimates, leaving the alliance 300,000 b/d above target. Opec+ has been cutting output since November 2022 in a self-described bid to support and balance the oil market. A new round of "voluntary" reductions by several members came into force in January this year and these have now been extended by three months until the end of June.
But the already herculean task of managing the markets is being made harder by those members that have proved either unable or unwilling to fully adhere to their targets. Iraq and Kazakhstan publicly pledged their support for Opec+ last month and vowed to compensate for producing too much in January over the subsequent four months. This should have pushed their February production well below their targets, whereas Iraq actually increased output by 10,000 b/d to 4.23mn b/d — 230,000 b/d above target. Kazakh output fell by 20,000 b/d to 1.59mn b/d, but this was still 120,000 b/d above target.
The overproduction is sure to test the patience of Opec+ heavyweight Saudi Arabia, which has shouldered much of the burden of the group's collective cuts over the past 16 months. Saudi production edged up to 8.97mn b/d in February, 10,000 b/d below its target for the month. This means that Saudi Arabia alone is holding back around 3.1mn b/d — or over 25pc — of its production capacity to help manage the markets.
The UAE produced 2.93mn b/d last month, meaning that it is keeping nearly 1.4mn b/d of its capacity off line, which in percentage terms at 32pc is even higher than Saudi Arabia. The UAE is investing heavily to boost its production capacity and argues that this should be reflected in its production target — something it partly achieved in the group's production allocations for 2024. It is unlikely to be impressed with large overproducers.
The alliance is also under pressure from rising non-Opec producers such as the US, Guyana and Brazil to keep its own production lower for longer — which is likely to be one of the key reasons behind the latest decision to extend its cuts.
The rise of the exempt
But Opec+ is also under pressure from three of its own members that are not bound by production targets owing to sanctions or conflict. Iran, Libya and Venezuela produced a combined 210,000 b/d more in February alone.
Libya's production returned closer to normal levels, increasing by 130,000 b/d to 1.16mn b/d after a key field restarted in January following a near three-week shutdown. If state-owned NOC succeeds in its capacity expansion plans, more gains could be on the way this year. Iran's production continued on its upwards trajectory, rising by 40,000 b/d to 3.27mn b/d — the highest since October 2018. The gains have come despite US sanctions and Washington's attempts to crack down on the country's oil trade.
Venezuelan output increased by 40,000 b/d to 880,000 b/d, the highest since February 2019, when it produced 1mn b/d. Much of the country's gains came after Washington agreed to lift some oil-related sanctions in October last year in return for Caracas promising to hold free and fair elections. But with a Venezuelan court still banning the country's leading opposition candidate from running in the upcoming presidential elections, the US looks likely to effectively reimpose sanctions on 18 April. This would probably send Venezuela's oil production on a downward trajectory.
| Opec+ production | mn b/d | |||
| Feb | Jan* | Target† | ± target | |
| Opec 9 | 21.53 | 21.52 | 21.22 | +0.31 |
| Non-Opec 9 | 13.09 | 13.02 | 13.10 | -0.01 |
| Total Opec 18 | 34.62 | 34.54 | 34.32 | +0.30 |
| *revised †includes additional cuts where applicable | ||||
| Opec wellhead production | mn b/d | |||
| Feb | Jan | Target† | ± target | |
| Saudi Arabia | 8.97 | 8.96 | 8.98 | -0.01 |
| Iraq | 4.23 | 4.22 | 4.00 | +0.23 |
| Kuwait | 2.44 | 2.47 | 2.41 | +0.03 |
| UAE | 2.93 | 2.92 | 2.91 | +0.02 |
| Algeria | 0.91 | 0.91 | 0.91 | 0.00 |
| Nigeria | 1.54 | 1.53 | 1.50 | +0.04 |
| Congo (Brazzaville) | 0.23 | 0.22 | 0.28 | -0.05 |
| Gabon | 0.23 | 0.23 | 0.17 | +0.06 |
| Equatorial Guinea | 0.05 | 0.06 | 0.07 | -0.02 |
| Opec 9 | 21.53 | 21.52 | 21.22 | +0.31 |
| Iran | 3.27 | 3.23 | na | na |
| Libya | 1.16 | 1.03 | na | na |
| Venezuela | 0.88 | 0.84 | na | na |
| Total Opec 12‡ | 26.84 | 26.62 | na | na |
| †includes additional cuts where applicable | ||||
| ‡Iran, Libya and Venezuela are exempt from production targets | ||||
| Non-Opec crude production | mn b/d | |||
| Feb | Jan* | Target† | ± target | |
| Russia | 9.41 | 9.33 | 9.45 | -0.04 |
| Oman | 0.77 | 0.77 | 0.76 | +0.01 |
| Azerbaijan | 0.49 | 0.47 | 0.55 | -0.06 |
| Kazakhstan | 1.59 | 1.61 | 1.47 | +0.12 |
| Malaysia | 0.34 | 0.35 | 0.40 | -0.06 |
| Bahrain | 0.20 | 0.20 | 0.20 | 0.00 |
| Brunei | 0.08 | 0.08 | 0.08 | -0.00 |
| Sudan | 0.06 | 0.06 | 0.06 | -0.00 |
| South Sudan | 0.15 | 0.15 | 0.12 | +0.03 |
| Total non-Opec | 13.09 | 13.02 | 13.10 | -0.01 |
| *revised †includes additional cuts where applicable | ||||
