Opec crude output rises as Iran stages recovery

Opec crude production rose in March as higher output from Iran more than offset further cuts to supply by Saudi Arabia.

Output increased by close to 190,000 b/d to 24.84mn b/d (see table). Production by the 10 Opec members committed to output cuts under the Opec+ agreement was also higher as a reduction in Saudi output was outstripped by increases in Iraq and some west African countries.

Saudi Arabia exceeded its extra cut in March, producing over 1mn b/d below its Opec+ commitment of 9.12mn b/d and taking its compliance to 155pc. Riyadh has pledged to continue with the extra 1mn b/d cut in April but undertook at the Opec+ meeting at the start of this month to unwind it gradually. The cut falls to 750,000 b/d in May, 400,000 b/d in June and stops in July.

Iranian production climbed to its highest since August 2019 against a backdrop of rising exports. Iran has been boosting exports to China, although shipments have gone officially unacknowledged so far. Chinese customs data, which are not yet available for March, list no imports from Iran in January-February and last record Iranian crude arrivals in December of just over 120,000 b/d. But market sources say Chinese refiners imported just over 400,000 b/d of Iranian crude in January-February, and roughly 500,000 b/d in March. Deliveries last month included the part-discharge of a 2mn bl cargo on the Hecate that had initially been flagged as Omani crude by vessel tracking services.

Iranian output could rise further with the revival of the Iran nuclear deal, including the potential lifting of sanctions that have removed 2mn b/d of crude from the global markets since 2018. Iran and the US held indirect talks on a rebooted deal this week. The talks adjourned today and will resume next week.

Firm compliance by Opec's core members resulted in Opec+ adherence with the output deal of 114pc last month. But several countries continued to produce above quota. Iraq, by the admission of its own state-owned oil marketer Somo, produced 8,000 b/d above its target of 3.65mn b/d in March. Argus assesses Iraqi output at 3.93mn b/d last month, or around 70,000 b/d above target. Russia boosted production beyond its new higher Opec+ ceiling last month after recovering from cold weather restrictions in February. Its crude output rose by 160,000 b/d to 9.33mn b/d in March, outpacing a 75,000 b/d increase in its quota and returning its compliance rate to 95pc, roughly where it has been since stricter production limits came into effect in May last year. Kazakh crude production fell slightly in March, despite a 10,000 b/d quota increase, largely because of a dip in the middle of the month. Output fell by 20,000 b/d to 1.51mn b/d, still roughly 70,000 b/d above quota.

By Denise Albrighton