Opec+ compliance steady in March

The Opec+ coalition's compliance with its March production commitments was steady on the month at 113pc in March, according to two Opec+ delegates.

The alliance's 10 Opec members were once again 124pc compliant with their March obligations, unchanged from February. Their non-Opec counterparts achieved just 93pc conformity, down from 94pc in February.

The Opec+ production target rose by 75,000 b/d from February in March, with Russia and Kazakhstan having allowances to lift their individual output by 65,000 b/d and 10,000 b/d in that period, respectively. Opec conformity benefited from Saudi Arabia's ongoing efforts to keep its production 1mn b/d below its official 9.119mn b/d ceiling until and including April — after which Riyadh will gradually phase in increases.

Opec+ reaches its compliance numbers by averaging the production estimates of six independent secondary sources, including Argus. Opec+ conformity was estimated by Argus to be 114pc in March, with Opec members at 125pc and non-Opec countries at 94pc.

Opec+ countries have exceeded their production ceilings by a cumulative 3.316mn b/d — equivalent to around 99.5mn bl — over May-March, up from roughly 3.027mn b/d over May-February, according to one Opec+ delegate. Opec members were responsible for 1.369mn b/d — or just over 41mn bl — of the May-March overproduction, up from 1.276mn b/d in May-February. This implies non-Opec participants overproduced by around 1.947mn b/d — or around 58.4mn bl — in May-March, higher from 1.751mn b/d in May-February. The figures do not represent monthly averages, but the sum of the monthly figures by which Opec+ overproducers have surpassed their respective quotas.

Overproduction figures can increase sharply despite steady compliance figures, because group conformity levels also factor additional cuts by some members.

Compliance numbers are preliminary and will be confirmed at the upcoming meeting of the Opec+ Joint Ministerial Monitoring Committee (JMMC) on 28 April. Several delegates said that the coalition could still decide to opt against the ministerial assembly that is currently still scheduled for the same day, given that the group has already agreed its production strategy until the end of July.

One delegate flagged slow recoveries in global demand in the second half of the year, following reduced crude appetite in the first six months because of a new spate of Covid-19 outbreaks. Another also signalled improvements in observed demand, but said these increases were not yet likely to constitute the foundation of additional increases in Opec+ production beyond the group's existing policy.

By Ruxandra Iordache